Contemporary Problems of Public Law in Canada: Essays in honour of Dean F.C. Cronkite 9781487576448

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CONTEMPORARY PROBLEMS OF PUBLIC LAW IN CANADA

DEAN f. C. CRONKITE, Q.C., B.A., M.A., LLB., LLD,, D.C.L

CONTEMPORARY PROBLEMS OF PUBLIC LAW IN CANADA

Essays in Honour of Dean F. C. Cronkite

Edited by

0. E. LANG Published for the College of Law University of Saskatchewan by University of Toronto Press

© University of Toronto Press 1968

Printed in Canada Reprinted in 2018 ISBN 978-1-4875-7719-3 (paper)

Preface

came to Saskatchewan from his New Brunswick home in 1924 to spend a few years in the academic world but with the fairly clear intention of returning home to a political career. He never did go back but made his home in Saskatoon to the great delight and benefit of the Law College and generations of law students. He was Dean from 1929 to 1961 and for all these years he had a profound influence on his students. Dean Cronkite's interest in politics was reflected in his interests in law and in his pragmatic attitude towards implementation of ideals. His concern for "government under the rule of law" set a public-law tone for the College. In the fields of private law the emphasis was upon the best rule and how to adapt the law. Through his graduates, Dean Cronkite has had significant influence upon legal development in Canada, well beyond his own direct influence as a perennial adviser to government in Saskatchewan. Soon after the Dean's retirement this volume of essays was planned to honour him and his work. It was agreed to ask Canadian deans of law who had been Dean Cronkite's students to act as an Advisory Board and we are grateful to Deans George F. Curtis of the University of British Columbia and W. R. Lederman of Queen's for their assistance in that role. The essays themselves concern matters of public law, reflecting Dean Cronkite's special interests and activities. They are offered on behalf of his graduates everywhere with affection and admiration for his work and, above all, for his great qualities of understanding and sympathy for every student. It was these qualities which had turned him from politics by drawing him to the life of the College. Countless graduates testify to the importance to them of this fact. FREDERICK CLINTON CRONKITE

O.E.L.

Contents

i

PREFACE

Foundations of Canadian Law in History and Theory W. R. JACKETT

3

The Canadian Bill of Rights E. A. DRIEDGER

31

Freedom of the Press E. A. TOLLEFSON

49

Crown Immunity and the Power of Judicial Review B. L. STRAYER

71

Judicial Review of the Proceedings of Administrative Tribunals in Saskatchewan MERVYN WOODS

90

Legislative Power to Create Corporate Bodies and Public Monopolies in Canada W. R. LEDERMAN

108

Combines: The Continuing Dilemma D. G. BLAIR

127

Rational Solutions for Labour Problems 0. E. LANG

164

Contributors

D. G. Blair, B.A., LL.B.(SASK.), B.C.L.(oxoN), is a Barrister and Solicitor in Ottawa. E. A. Driedger, B.A., LL.B., LL.D.(SASK.), Q.c., is the Canadian Consul General in Hamburg, Germany.

w.

R. Jackett, B.A., LL.B.(SASK.), B.C.L., M.A.(OXON), D.C.L. (sASK.), is President of the Exchequer Court of Canada.

0 . E. Lang, B.A., LL.B.(sASK.), B.C.L.(oxoN), is Dean of the College of Law, University of Saskatchewan, Saskatoon. W. R. Lederman, B.A., LL.B.(SASK.), B.C.L.(oxoN), LL.D.(SASK.), Q.c., is Dean of the Faculty of Law, Queen's University, Kingston. B. L. Strayer, B.A., LL.B.(SASK.), B.C.L.(OXON), S.J.D.(HARVARD), is Associate Professor in the College of Law, the University of Saskatchewan, Saskatoon. E. A. Tollefson, B.A., LL.B.(SASK.), B.C.L.(oxoN), is Associate Professor of Law in the College of Law, the University of Saskatchewan, Saskatoon. Mervyn Woods, M.B.w., B.A., LL.B.(SASK.), LL.M., J.J.D.(N.Y.u), is Associate Justice of Appeal in Saskatchewan.

CONTEMPORARY PROBLEMS OF PUBLIC LAW IN CANADA

W. R. JACKETT

Foundations of Canadian Law in History and Theory

THE GENERAL THEORY

Justice in Canada is administered in accordance with the law. This is our bulwark against prejudice and tyranny. What is the Law? I am not here so much attempting to answer that question as to explain how, under our system, it is answered in relation to particular problems. Statutes and judicial decisions are the materials lawyers use in constructing the answer to each such question. The problem is to fit a particular statute or judicial decision into its proper place so as to give it due weight and value in the solution of a specific problem, and historical analysis can assist in this task. Historical analysis presupposes a sufficient knowledge of the history of our law to enable the legal practitioner to appraise and value each piece of material-each statute or judicial decision-that may be relevant to the immediate problem. It is proposed to sketch, in outline only, that history with particular reference to the province of Ontario, and to illustrate how that history is used-usually unconsciously-in the determination of the answer to the question "What is the law?" in individual cases. The first project is therefore to sketch briefly the history of our law in so far as it is relevant to the determination of current legal problems. The commencement of that history is to be found in England in mediaeval times when the king was, in law if not in fact, a person who, while having all the legal and physical personal characteristics of other persons, was in addition the person who, to the exclusion of all others, wielded executive, judicial, and legislative powers of a sovereign character. Very early in the remote days of history, the

4

Contemporary Problems of Public Law in Canada

king's judicial power was for all practical purposes delegated by the king to professional judges and the king's legislative power became merged in the powers of Parliament, that is, His Majesty acting by and with the advice and consent of the Lords Spiritual and Temporal and the Commons. The king's executive power has never been taken from him. It has been cut down in all directions. It has been surrounded by all sorts of safeguards and limitations. But, subject to that, in law, the executive power of the state continues to be vested in the person who is, for the time being, sovereign. So much for mediaeval times. The next stage in our history is the extension of the sovereignty of the king or queen of England to parts of the world outside Britain, either by discovery or conquest. Each time such an extension took place the ambit of the sovereignty of the British Crown became enlarged so as to encompass the additional part of the world so acquired. When the sovereignty of the Crown was extended to an inhabited area by conquest (a process that is, of course, a thing of the past) the new sovereign displaced the old in all aspects-legislative, executive, and judicial. Nevertheless, the laws and legal institutions existing in the conquered country before the conquest continued until the new sovereign exercised his or her legislative authority to make some change in them. 1 In the case of a new dominion of the Crown acquired by discovery, "a new and uninhabited country found out by English subjects," the situation was different because there was in such case no pre-existing law to continue in force Until altered by the new sovereign. In such a case, the legal vacuum was filled by the importation of English law. The theory was that "as the law is the birthright of every citizen" the English subjects by whom the new country was discovered were regarded as having carried their laws with them. English law became the law of the new country in so far as it was applicable to the conditions of the newly discovered dominion of the sovereign. When the Crown has acquired a new dominion with a system of law either continuing from before conquest, or imported by the 1. This concept was laid down authoritatively by Lord Chief Justice Mansfield in 1774 in the leading case of Campbell v. Hall (1774), 1 Cowp 204, at 208 : "(1.) A country conquered by the British arms becomes a dominion of the King in the right of his crown, and therefore necessarily subject to the legislative power of the Parliament of Great Britain. (2.) The conquered inhabitants once received into the conqueror's protection become subjects; and are universally to be considered in that light, not as enemies or aliens .. .. (5.) The laws of a conquered country continue in force until they are altered by the conqueror. The justice and antiquity of this maxim are incontrovertible. . . ."

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sovereign's subjects in the case of discovery, how can that system of law be changed? Lord Mansfield answered that question for the case of a conquered possession in Campbell v. Hall where he said, in answering the question whether the king, of himself, that is, acting independently of Parliament, had power to change the laws of a newly acquired dominion: " . .. He has a legislative power over a conquered country limited to him by the constitution, and subordinate to the constitution and parliament."2 This legislative power was vested in the sovereign under the British system to be exercised "of himself," until such time as a representative legislature was granted to the inhabitants of the new dominion either by the sovereign acting alone or by Parliament. After such a grant was made, the sovereign ceased to have any legislative authority in the colony except in his role as part of the Imperial Parliament. So, in Campbell v. Hall, letters patent issued by the sovereign, by which he purported to levy a duty on goods exported from Granada, were held to be invalid because letters patent had already been issued granting representative government to the inhabitants of the colony. In reviewing Canadian history in this context it is necessary to pass over some events and make an arbitrary beginning. The Treaty of Paris of 1763 is a useful starting point. By this treaty, concluded on February 10, 1763, France ceded to Great Britain, among other possessions, what was then known as "Canada," which included substantially all of what is now known as "Ontario." On October 7 of the same year, the then sovereign of Great Britain issued what is now known as the Royal Proclamation of 1763, publishing the fact that, on the advice of his Privy Council, he had granted letters patent to erect four separate governments called Quebec, East Florida, West Florida, and Granada. We are of course interested in this proclamation only in so far as it provided a government for what it called Quebec because that was substantially what had been ceded by France under the name of Canada, and so included what is now called "Ontario." After delineating the boundaries of the respective colonial governments, the Proclamation of 1763 declared that His Majesty had, by letters patent, directed the governors of the various colonies to summon "General Assemblies" and had empowered the governors, with the consent of their councils and the general assemblies to make "Laws ... for the Public Peace, Welfare and good Government" of the colonies, "as near as may be agreeable to the Laws of England." The Royal Proclamation of 1763 further provided for the inhabitants 2. Ibid., at 209.

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Contemporary Problems of Public Law in Canada

of the new colonies having the "Enjoyment of the benefit of the Laws of our Realm of England." At appro~imately the same time as the Proclamation of 1763 was issued, the King issued to James Murray a Commission constituting him his "Captain General and Governor in Chief" in and over the Province of Quebec and gave him detailed instructions on how he was to carry on the government of that province or colony on the King's behalf. At this point, it is well to pause and consider what the situation was from a strictly legal point of view-leaving aside all the constitutional practices and conventions that have grown up to complicate our appreciation of legal and constitutional matters. King George, the sovereign of Great Britain, had acquired a new possession-Canadawhich he had renamed Quebec. Having acquired that possession by conquest, he had the sovereign power to govern it and make laws for it. In the exercise of those powers, he appointed a person to govern it on his behalf. That person was merely, to use current terminology, a senior civil servant. He was appointed governor by the King by letters patent, the usual instrument whereby the sovereign exercised his sovereign powers, and thus became the forerunner of the modem governor general and lieutenant governors. The difference between the colonial governor and the modem governor general is that the colonial governor was a civil servant exercising on behalf of his king very real sovereign powers of government, whereas the governor general today exercises, on behalf of the sovereign, powers which have become subordinated to the requirements of responsible governments. The Proclamation of 1763 was the basis of colonial government in Quebec from 1763 to 1774. Things did not go as smoothly as they might have during that period and, in 1774, the Imperial Parliament passed the Quebec Act. 3 The Quebec Act frankly admitted that experience had shown the provisions of the Proclamation of 1763 in respect of the civil government of Quebec "to be inapplicable to the state and circumstances of the province." It therefore revoked, annulled, and made void, from and after May 1, 1775, inter alia : (a) The proclamation of 1763 so far as it related to the province of Quebec; (b) the Commission of the Governor of Quebec; (c) all ordinances made by the Governor of Quebec relating to that province. The Quebec Act of 1774 further provided for: (a) the continuance of the use of the criminal law of England (s.x1); (h) resort in all 3. 14 Geo. III, c.83.

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7

matters of controversy relative to property and civil rights, to the laws of Canada, except as varied by ordinances made by the governor and the legislative council provided for by that Act (s.vm) (The "Laws of Canada" so introduced were the body of laws in force in this area before the Proclamation of 1763 and were therefore basically the civil law of France); (c) an appointed legislative council to have power to make ordinances for the peace, welfare, and good government of the province, with the consent of the governor (s.xn). Out of an abundance of caution, it provided that nothing in the Act should extend to repeal within Quebec any act of the Parliament of Great Britain made for prohibiting, restraining, or regulating, the trade and commerce of His Majesty's colonies and plantations in America, or any other Act of Parliament previously made concerning or respecting the said colonies or plantations. While the Imperial Parliament in 1774 delegated power to the newly constituted legislative council to make laws for the new colony, it, at the same time, made it very clear that the Imperial Parliament itself had, in the past (and presumably would in the future), made laws applicable in the colony. The situation created by the Quebec Act did not continue to be satisfactory for long. United Empire Loyalists, moving into the area from the newly independent United States, demanded representative institutions. They had, to a large extent, settled west of the French Canadians in what is now the province of Ontario, and to meet the new situation, it was decided to divide the then province of Quebec into two provinces called Upper Canada and Lower Canada, and this was done by the Constitutional Act, 1791.4 The Constitutional Act of 1791 repealed the relevant provisions of the Quebec Act and made provision for a legislative council and assembly in each of the two provinces of Upper Canada and Lower Canada. It contemplated that His Majesty would appoint a governor or lieutenant governor for each province. The legislative council was to be appointed and the assembly was to be elected. Section 2 of the Constitutional Act provided inter alia, that, in each of the provinces, His Majesty should have power, acting with the Legislative council and the assembly of the particular province "to make laws for the peace, welfare, and good government thereof." Section 33 of the Act provided that all laws in force on the commencement of the Act within Upper Canada or Lower Canada were to remain in force as if that Act had not been passed, and as if the 4. 31 Geo. III, c.31.

8

Contemporary Problems of Public Law in Canada

province of Quebec had not been divided except in so far as they were expressly repealed or varied then or thereafter by the appropriate provincial legislature. Immediately after the Constitutional Act, therefore, the "Laws of Canada" that had been reinstated by the Quebec Act of 1774 were still in force both in Lower Canada and Upper Canada. Such "Laws of Canada" were of course the laws in force in Canada before the Proclamation of 1763, that is the laws brought to Canada from France by the French settlers. This law has been described as essentially French and civil, strongly influenced by Roman Law, old French customs, and especially the Code Napoleon. 5 The Constitutional Act, however, only continued those laws in force after 1791, subject to being repealed or varied in either Lower Canada or Upper Canada by the legislature constituted for the particular province. So, on September 17, 1792, the new legislature of Upper Canada passed its first statute: "An Act Introducing English Civil Law into Upper Canada."6 This statute which may from time to time bear upon an understanding of the precise effect of judicial decisions in relation to problems arising in this period provided as follows: ... Be it enacted, by the King's most excellent Majesty, by and with the advice and consent of the Legislative Council and Assembly of the Province of Upper Canada ... That from and after the passing of this Act ... the authority of the said laws of Canada, and every part thereof, as forming a rule of decision in all matters of controversy relative to property and civil rights, shall be annulled, made void and abolished, throughout this Province, and that the said Laws, nor any part thereof as such, shall be of any force or authority within the said Province nor binding on any of the inhabitants thereof. II. Provided always, and be it Enacted by the Authority aforesaid, That nothing in this Act shall extend to extinguish, release or discharge, or otherwise to affect any existing right, lawful claim or incumbrance, to and upon any lands, tenements or hereditaments within the said Province, or to rescind or vacate, or otherwise to affect any contract or security already made and executed conformably to the usages prescribed by the said Laws of Canada. III. And be it further enacted by the Authority aforesaid, That from and after the passing of this Act, in all matters of controversy relative to property and civil rights, resort shall be had to the Laws of England as the rule for the decision of the same.

s. J.-G. Castel, The Civil Law System of the Province of Quebec (Toronto: Butterworths, 1962), 1. 6. 32 Geo. III, c.1 (Upper Canada); replaced in due course for Ontario by The Property and Civil Rights Act R.5.0 . 1877, c.92.

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VI. Provided always, and be it Enacted by the Authority aforesaid, that nothing in this Act contained, shall vary, or interfere, or be construed to vary or interfere with any of the subsisting provisions respecting ecclesiastical rights and dues within this Province or with the forms of proceeding in civil actions, or the jurisdiction of the Courts already established, or to introduce any of the Laws of England respecting the Maintenance of the poor, or respecting bankrupts.

Thus the legislature of Upper Canada, by its first act, in conformity with good legislative practice, while replacing the "Laws of Canada" with the laws of England was careful to provide that the change was not to affect any existing rights to land or existing contracts or securities. In theory, at least, some titles to land and other rights in Ontario may depend on transactions, prior to this Act passed in 1792, that are governed by the early laws of Canada-that is, French civil law. In 1800 a similar provision was made with reference to criminal law. 7 The next relevant event in our history is the Union Act, 1840.8 This Act was entitled "An Act to re-unite the Provinces of Upper and Lower Canada, and for the government of Canada" and provided for the provinces being reunited under the name of the "Province of Canada." It enacted that all laws in force in Upper or Lower Canada at the time of the union were to remain in force in the two parts of the new Province of Canada, respectively, as if the Union Act of 1840 had not been passed, and as if the two provinces had not been united, except in so far as such laws might be repealed or amended by the legislature of the new Province of Canada (Section XLVI). The legislature of the Province of Canada (Section LXI) was Her Majesty, acting by and with the advice of the Legislative Council and Assembly, for the appointment and election of which provision was made by the Union Act, 1840. This colonial legislature was given power to make laws for the peace, welfare, and good government of the Province of Canada, such laws not being repugnant to the Union Act, 1840, or to unrepealed parts of the Constitutional Act or "to any Act of Parliament made or to be made and not hereby repealed, which does or shall by express enactment or by necessary intendment extend to the Provinces of Upper and Lower Canada, or to either of them or to the United Province of Canada." Here again the Imperial 7. 40 Geo. III, c.1, s.1 (U.C.): " ... The Criminal Law of England as it stood on the seventeenth day of September, in the year of our Lord one thousand seven hundred and ninety-two, shall be and the same is hereby declared to be the Criminal Law of this Province." 8. 3 & 4 Viet. c.35 (Imperial).

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Contemporary Problems of Public Law in Canada

Parliament was careful to make it clear that it was not surrendering its right to make laws for the new Province of Canada even though it was creating a legislative authority in the province. The result was that, from 1840 on, the laws in force in Upper Canada were, subject to a question to be raised later, the laws of England introduced in 1792 as amended or changed between 1792 and 1840 by the legislature of Upper Canada and as amended or changed from 1840 on by acts of a legislature having jurisdiction over both Upper and Lower Canada, namely the legislature of the Province of Canada. This situation continued until Confederation in 1867. During the period before Confederation there was an Imperial statute of general importance in the field we are surveying. I refer to the Colonial Laws Validity Act, 1865.9 This statute deals inter alia with those main classes of problems that could, and presumably did, arise concerning the validity of colonial laws-that is, statutes enacted by legislatures such as those constituted by or under the Quebec Act, 1774, the Constitutional Act, 1791, and the Union Act, 1840. The first question dealt with by the Colonial Laws Validity Act was that of possible conflicts between colonial statutes and Imperial legislation applicable to the colony. This it did by s.2, which reads: 2. Any colonial law which is or shall be in any respect repugnant to the provisions of any Act of Parliament extending to the colony to which such law may relate, or repugnant to any order or regulation made under authority of such Act of Parliament, or having in the colony the force and effect of such Act, shall be read subject to such Act, order, or regulation, and shall, to the extent of such repugnancy, but not otherwise, be and remain absolutely void and inoperative.

This section must be read with a paragraph in s.1, which provides that "An Act of Parliament, or any provision thereof, shall, in construing this Act, be said to extend to any colony when it is made applicable to such colony by the express words or necessary intendment of any Act of Parliament. 1110 The effect of s.2 is that where there is any repugnancy between a colonial law and an Imperial statute applicable to that colony or any subsidiary legislation under such an Imperial statute, the colonial law must yield to the Imperial Law to the extent of the repugnancy but not otherwise. This rule operates whether the repugnant Imperial legislation was in existence when the colonial law was 9. 28 & 29 Viet. c.63.

10. In this statute "Parliament" means, of course, the Imperial Parliament at

Westminster.

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first enacted or came into existence subsequently. It must be noted that the rule laid down in this section that a colonial law must yield to any Imperial statute to which it is repugnant applies only in the case of an Imperial statute that has been made applicable to the colony by the Imperial Parliament. Section 2 has no application, for example, where an English statute became part of the law of Upper Canada because it was part of the laws of England introduced into Upper Canada by the 1792 Act of the legislature of Upper Canada. In other words, a distinction must be drawn between Imperial statutes that are in force in the colony of their own force -ex proprio vigoreand Imperial statutes that are in force in the colony because a colonial statute has adopted them, by reference, as part of the law of the colony. English statutes which have been made part of the law of the colony by colonial legislation would appear to fall under s.3 of the Colonial Laws Validity Act. Section 3 of the Colonial Laws Validity Act dealt with possible conflicts between colonial statutes and the laws of England other than Imperial legislation made specially applicable in the colony. That is, it dealt with the common law, the rules of equity, and Imperial statutes not applicable in the colony by virtue of Imperial legislation. Section 3 reads as follows: "No colonial law shall be or be deemed to have been void or inoperative on the ground of repugnancy to the law of England, unless the same shall be repugnant to the provisions of some such Act of Parliament, order, or regulations as aforesaid."11 In other words, for example, the body of law known as the "Laws of England" to which the 1792 Act of the legislature of Upper Canada required that resort should be had for the decision of matters of controversy relative to property and civil rights, and which were continued in force by the Union Act, 1840, might be amended by the colonial legislature even where any such law consisted of an Imperial statute. Where, however, an Imperial statute, by its own terms, expressly or by necessary intendment, was made applicable to a colony, colonial legislation must yield to it to the extent of any repugnancy. Finally, the Colonial Laws Validity Act dealt with a possible inconsistency between colonial laws and the sovereign's instructions to the governor who assented to the bill in the sovereign's name. Section 4 provides: No colonial law, passed with the concurrence of or assented to by the Governor of any colony, or to be hereafter so passed, or assented to, shall 11. I .e., as dealt with in s.2.

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Contemporary Problems of Public Law in Canada

be, or be deemed to have been, void or inoperative by reason only of any instructions with reference to such law or the subject thereof which may have been given to such Governor by or on behalf of Her Majesty, by any instrument other than the letters patent or instrument authorizing such Governor to concur in passing, or to assent to, laws for the peace, order, and good government of such colony, even though such instructions may be referred to in such letters patent, or last mentioned instrument.

By implication, although it does not say so directly, this section would appear to say that the validity of a colonial statute may be attacked as having been passed contrary to the formal instructions to the governor. This basis for attack has never been used. The next stage in our history, and the most important because it is the source of our current fundamental rules, is the British North America Act, 1867 .12 That statute authorized Her Majesty, Queen Victoria, to issue a proclamation, the effect of which would be that the provinces of Canada, Nova Scotia, and New Brunswick would form and be one dominion under the name of Canada. 13 The 1867 Act provided that Canada, this new dominion, should be divided into four provinces, named Ontario, Quebec, Nova Scotia, and New Brunswick;14 it provided a Parliament for the new dominion and provided for a legislature for each of its provinces. It thereupon divided sovereign legislative authority, subject to certain reservations, between the new Parliament on the one hand and the various provincial legislatures on the other hand. The key section of the 1867 statute, as far as our present review is concerned, is s.129, which reads as follows: 129. Except as otherwise provided by this Act, all Laws in force in Canada,

Nova Scotia, or New Brunswick at the Union, and all Courts of Civil and Criminal Jurisdiction, and all legal Commissions, Powers, and Authorities, and all Officers, Judicial, Administrative, and Ministerial, existing therein at the Union, shall continue in Ontario, Quebec, Nova Scotia and New Brunswick respectively, as if the Union had not been made; subject nevertheless (except with respect to such as are enacted by or exist under Acts of the Parliament of Great Britain or of the Parliament of the United Kingdom of Great Britain and Ireland) to be repealed, abolished, or altered by the Parliament of Canada, or by the Legislature of the respective Province, according to the Authority of the Parliament or of that Legislature under this Act. 12. 30 & 31 Viet., c.3. 13. 5.3. In s.146, it also provided for the admission, to the same union, of Newfoundland, Prince Edward Island, British Columbia, Rupert's Land, and the North West Territories. 14. S.S.

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So, to find the law of Ontario today, s.129 requires us to start with the law that was in force in this part of the old Province of Canada prior to the union in 1867 and to ascertain what changes have since been made by the Parliament of Canada, within its legislative authority, and by the legislature of Ontario, within its legislative authority. Note that s.129 appears to make it clear that neither the Canadian Parliament nor our provincial legislature has any power to change or repeal any Imperial statute constituting part of the law in force in Canada. POST-CONFEDERATION DEVELOPMENTS WITH SPECIAL REFERENCE TO ONTARIO

The Property and Civil Rights Act, 15 is the modern descendant of the Upper Canada statute of 1792 discussed above. It provides that "In all matters of controversy, relative to property and civil rights, resort shall be had to the laws of England as they stood on the 15th day of October, 1792. . . ." This provincial statute can have no application to matters outside the legislative jurisdiction of the provincial legislature. It cannot apply to bills of exchange, banking, copyright, trade marks, etc., which are placed by section 91 of the British North America Act within the exclusive legislative jurisdiction of the Canadian Parliament. On the other hand, the 1792 statute could constitutionally apply to these subjects if its words, properly construed, do apply to them. Interesting questions may arise or may have arisen in this connection. This matter will be considered further below. In 1902, the legislature of Ontario tried to cope with the practical problem created, for the ordinary practising lawyer and the busy judge, by the practice that has been followed by the legislatures of the past of introducing the laws of England into Ontario by mere statutory reference to the English statute book. 16 The problem is described graphically in the preamble to the statute proposing revision and consolidation. 17 It notes that some of the Imperial statutes incorporated into the law of the province are obsolete or have been superseded and that others are "in language which has become antiquated or obscure." 15. Now R.5.O. 1960, c.310. 16. An Act respecting the Imperial Statutes relating to Property and Civil Rights incorporated into the Statute Law of Ontario, 5.0. 1902, c.13. 17. R.5.O. 1897, Vol. III at vi.

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Contemporary Problems of Public Law in Canada

To solve the problem, the 1902 statute adopts the technique used in this country for the periodic revision of the statutes. It provides for a further volume of the then current R.S.O. 1897. It provides for this new volume setting out as new chapters of the Revised Statutes, that is, chapters 322 to 342 inclusive, revisions for Ontario of most of the laws of Ontario that previously had existed in the form of Imperial statutes because they had been introduced into this region by colonial or provincial statutes such as the Act of 1792. The new volume of the Revised Statutes of Ontario, 1897, also contains certain schedules showing imperial statutes which it repealed for Ontario, showing where each provision of the repealed legislation is to be found in the new legislation if it has been included in the consolidation or otherwise what has happened to it, and showing Imperial acts that relate to property and civil rights that appear to be in force in Ontario by virtue of provincial legislation and are not repealed, revised, or consolidated at that time. These schedules are provided for by the 1902 statute and have the force of statutes. Incidentally, at the front of this volume is a useful appendix of Imperial legislation and a table purporting to show "Imperial Statutes in Force in Canada at the end of 1901 Ex Proprio Vigore." The Statute of Westminster18 is very important in the development of our law and the decision of the Privy Council in Nadan's case19 supplies the necessary background for it. By s.751 of the Criminal Code of 1892, the Canadian Parliament had purported to abolish appeals to the Privy Council in criminal matters. This provision had come down through the revisions of the Criminal Code until it appeared as s.1025 of the 1906 revision. In Nadan's case the Judicial Committee of the Privy Council finally had occasion to consider whether this section had succeeded in its object. The Judicial Committee came to the conclusion that s.1025 was invalid. The basis of the decision, as summarized in a subsequent case, The Attorney-General for Ontario v. The Attorney-General for Canada,20 was that, however widely the powers conferred on the Canadian Parliament by s.91 of the British North America Act, 1867 were construed, they (a) were confined to action to be taken in the Dominion (that is, the Canadian Parliament could not make laws having extra-territorial operation); and (b) did not author18. 22 George II, c.4. 19. Nadan v. The King, [1926] A.C. 482. 20. [1947] A.C. 127, at 149-50.

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ize the Dominion Parliament to annul the prerogative of the King in Council to grant special leave to appeal. The 1926 judgment in Nadan's case further held that, as s.1025 of the Criminal Code was repugnant to the Imperial Judicial Committee acts, it was void and inoperative by virtue of the Colonial Laws Validity Act, 1865. In the face of this situation, the Statute of Westminster dealt with two problems of legislative power that had bedevilled Canadian laws since Confederation : (a) Could the Canadian Parliament or a provincial legislature change an Imperial statute which was in force in Canada by virtue of the express words or necessary intendment of the Imperial statute? and (b) Could a Canadian or provincial statute be given extra-territorial effect? In broad terms, both the Canadian Parliament and the provincial legislatures were given power by the Statute of Westminster, within their respective legislative fields, to amend or repeal Imperial legislation in force in Canada; but, while the Canadian Parliament was given power to make laws having extra-territorial operation, the provincial legislatures were not given such power. A dramatic result of the Statute of Westminster was the change in the Canadian Parliament's power in regard to appeals to the Privy Council. Two decisions of the Privy Council, since the Statute of Westminster, dealt with this problem: The British Coal Corporation case in 193521 and the Privy Council Appeals Reference in 1947.22 In the latter case their Lordships reaffirmed the view expressed by them in 1935 that the Statute of Westminster had overturned the result of Nadan's case by removing the stricture contained in the Colonial Laws Validity Act upon Canadian laws repugnant to Imperial statutes, and the limitation on the power of the Dominion government to make laws with extra-territorial effect. Another example of extra-territorial legislation, the validity of which depends upon the Statute of Westminster, is our Dominion income tax law imposing a tax on non-residents. This has been held to be valid in British Columbia Electric Railway Company v. The King. 23 The general role of the Statute of Westminster in the history of the fundamental law of Canada is clear enough. Its precise effect in 21. [1935] A.C. 500. 22. [1947] A .C. 127. 23. [1946] A .C. 527.

16

Contemporary Problems of Public Law in Canada

particular cases raises questions of difficulty and importance, questions which will not be examined here. One Canadian statute passed after the Statute of Westminster should be noticed. That statute enacted in 1932 is the Extra-Territorial Act. 24 It provides: 2. Every act of the Parliament of Canada now in force enacted prior to the 11th day of December, 1931, that, in terms or by necessary or reasonable implication was intended, as to the whole or any part thereof, to have extraterritorial operation, shall be construed as if at the date of its enactment the Parliament of Canada then had full power to make laws having extraterritorial operation as provided by the Statute of Westminster, 1931.

There is no similar statute reviving statutes that were invalid prior to the Statute of Westminster because they were repugnant to Imperial statutes. In at least one case, however-Co-operative Committee on Japanese Canadians v. A.-G. for Canada 25-much the same effect has been given to the Statute of Westminster in this area by a decision of the Judicial Committee of the Privy Council. In that case the question was whether an order made under the War Measures Act was valid even though it was repugnant to an Imperial statute. The War Measures Act had been passed before the Statute of Westminster and, presumably, in its early life, no order in council under it could have been valid if it was in conflict with an Imperial statute in force in Canada by express enactment or necessary intendment of the Imperial Parliament. However, the particular order in council was passed after the Statute of Westminster and it was held to be valid and to operate to override such an Imperial statute. This historical review, which was intended to indicate an approach to problems rather than to give a comprehensive survey, might be summarized as follows: 1. By virtue of s.129 of the British North America Act, the law in force in Ontario is the law that was in force in Upper Canada at midnight on June 30, 1867 as that law has been changed by the Parliament of Canada and the legislature of Ontario, in their respective spheres and, possibly, by the Imperial Parliament prior to the Statute of Westminster of 1931. The commencement point is therefore the law of Upper Canada at the end of June 1867. 2. To find out what the law of Upper Canada was on June 30, 1867, we are required, by section 46 of the Union Act, 1840, to ascertain the law of Upper Canada immediately before the 1840 union and to 24. R.5.C. 1952, c.107. 25. [1947) A.C. 87, per L. D. Wright, at 106-7.

Jackett: Foundations of Canadian Law

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ascertain how that law was amended by the legislature of the old Province of Canada between 1840 and 1867. 3. To ascertain the law of Upper Canada as it was in 1840, s.33 of the Constitutional Act, 1791, requires that we find out what laws were in force in that part of the old Province of Canada in 1791 and what changes were made in those laws by the provincial legislature or the Imperial Parliament between 1791 and 1840. 4. This takes us to the Quebec Act, 1774, which, in addition to setting up a legislative council to make ordinances for the Province of Quebec, provided: (a) that in all matters of controversy relative to property and civil rights resort should be had to the laws of Canada (which in the context means, in effect, the laws of France that had been imported into Canada) and (b) for the continuance of use of the criminal law of England in the Province of Quebec. Moreover, the Quebec Act of 1774 revoked the Proclamation of 1763, which had provided for the inhabitants of this area having the benefit of the laws of England. This summary raises and leaves unanswered a number of questions: 1. When the Quebec Act "revoked, annulled and made void" the Proclamation of 1763, which had introduced the laws of England into the colony, and provided for the continuance of the English criminal law but brought back the laws of Canada (that is, French law) for matters of controversy relative to property and civil rights, did the words "property and civil rights" comprehend all fields of law other than crime and did the 1774 Act therefore bring back the laws of Canada in respect of all matters other than criminal matters or did the Act leave Canada with no law in respect of matters other than crime and "property and civil rights" in a narrow sense? 2. If the Act used "property and civil rights" in a sense wide enough to embrace all law other than criminal law-which seems probable but does seem to be putting a wider sense on the words than they would bear in modern times-does the 1792 ordinance of the legislature of Upper Canada use the same words in the same sense so that Upper Canada thenceforward had the benefit of the laws of England across the board? 3. If the answer to that question is in the affirmative, what is the effect of the current Ontario statute, The Property and Civil Rights Act, which, superficially, would appear to be a mere reproduction of the sense of the 1792 Act but which obviously can have no application to any part of that great field of law which is within the exclusive

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Contemporary Problems of Public Law in Canada

jurisdiction of the Canadian Parliament? That provincial statute would not normally, having been passed under s.92 of the British North America Act, 1867, be regarded as applying to any of the classes of subjects referred to in s.92 other than the one embraced by Head 13 thereof, namely "Property and Civil Rights in the Province." Probably the easiest branch of the law from this point of view is the criminal law. I shall therefore endeavour to sketch the situation with regard to the criminal law in broad outline. HISTORICAL ANALYSIS APPLIED TO PROBLEMS IN CRIMINAL LAW, DIVORCE, FISHERIES

The Proclamation of 1763, which had the force of a constitutional statute by reason of the doctrine laid down in Campbell v. Hall 26 provided for the inhabitants of the new colonies, which included Canada, having the "Enjoyment of the benefit of the Laws of our Realm of England." This of course included the criminal laws of England, which consisted of the doctrines of the common law in relation to criminal law as they had been changed by Imperial statute for England. Second, that body of law as it existed in 1763 was subject to amendment by the governor of the colony with the advice of the legislative council, but, if any such changes were made, it would seem that they were annulled and made void by the Quebec Act, 1774. Third, the Quebec Act continued the use of the criminal law of England in Quebec subject to amendment by the legislature set up by that Act. Fourth, fifth, and sixth, the criminal law was continued by the Constitutional Act of 1791, the Union Act of 1840, and the British North America Act of 1867, subject to amendment by the respective legislative authorities constituted by those acts. So, it would appear that we have the common law of England in relation to the criminal law as altered or added to by : (a) statutes in force in England in 1763, (b) ordinances passed under the Quebec Act, 1774, (c) ordinances passed under the Constitutional Act, 1791 (including that of 1800 referred to above 27 by which English law of 1792 was made applicable), (d) ordinances passed under the Union Act, 1840, (e) statutes of the Parliament of Canada, passed since 1867, (f) Imperial statutes, if any, made applicable here by express words or necessary intendment. 26. Supra note 1, at 3. 27. Supra note 7, at 12.

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Now all this is of academic interest but is it of any practical interest in view of the fact that we have, in Canada, a criminal code? Has not Parliament saved lawyers the trouble and clients the expense of this troublesome historical exploration 7 The answer is to be found in ss.7 and 8 of the Criminal Code28 7. (1) The criminal law of England that was in force in a province immediately before the coming into force of this Act continues in force in the province except as altered, varied, modified or affected by this Act or any other Act of the Parliament of Canada. (2) Every rule and principle of the common law that renders any circumstance a justification or excuse for an act or a defence to a charge continues in force and applies in respect of proceedings for an offence under this Act or any other Act of the Parliament of Canada, except in so far as they are altered by or are inconsistent with this Act or any other Act of the Parliament of Canada. 8. Notwithstanding anything in this Act or any other Act no person shall be convicted (a) of an offence at common law, (b) of an offence under an Act of the Parliament of England, or of Great Britain, or of the United Kingdom of Great Britain and Ireland, or (c) of an offence under an Act or ordinance in force in any province, territory or place before that province, territory or place became a province of Canada, but nothing in this section affects the power, jurisdiction or authority that a court, judge, justice or magistrate had, immediately before the coming into force of this Act, to impose punishment for contempt of court.

The result is that while Parliament has made it impossible for a person to be charged with any criminal offence at common law, other than contempt, or any criminal offence under any statute other than an act of the Parliament of Canada passed since July 1, 1867, it has not, in theory at least, deprived an accused of the justifications or excuses available at common law. The field of divorce law is an apt one for use in demonstrating the significance which may be attached to the exact date fixed for determining the content of English law introduced into a province. Subject to the questions raised above,29 the law of England in relation to matters other than crime that was introduced into Ontario is the English law as of 1792. Divorce was first provided for in England by a law of general application by the Matrimonial Causes Act, 1857.30 28. 5.C. 1953-54, c.51. 29. Ibid., at 31-32. 30. 20 & 21 Viet., c.85.

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Contemporary Problems of Public Law in Canada

That statute came into force on August 2, 1858. On November 19, 1858, by a proclamation of the Governor of British Columbia having the force of law, it was proclaimed that "The Civil and criminal laws of England, as the same existed at the date of the said Proclamation, and in so far as they are not from local circumstances inapplicable to the Colony of British Columbia, are and will remain in force within the said Colony" until amended by proper legislative authority. In 1908, the Judicial Committee of the Privy Council held that the English Matrimonial Causes Act, 1857, was part of the law of British Columbia and that the courts of British Columbia had jurisdiction to grant divorces. 31 For the prairie provinces, the Canadian Parliament had, in effect, introduced the laws of England, as far at least as divorce was concerned, as they were on July 15, 1870.32 The result is that the courts of those provinces may also grant divorces. 33 The province of Ontario did not receive divorce law as part of the laws of England of 1792, but the Parliament of Canada, in the exercise of its authority, under section 91(26) of the British North America Act, to make laws in relation to "Marriage and Divorce" enacted the Divorce Act (Ontario) which provided for the introduction of "the law of England as to the dissolution of marriage and as to the annulment of marriage as that law existed on the 15th day of July, 1870," subject to its applicability in Ontario and subject to modifications made by the proper parliament in relation to Ontario. 34 A third head of dominion power which has raised problems that required historical analysis for their solution is "Seacoast and Inland Fisheries," s.91(12) . An excellent analysis of the problem is found in the judgment of the Judicial Committee of the Privy Council delivered by Viscount Haldane in Attorney-General for Canada v. AttorneyGeneral for the Province of Quebec. 35 At the commencement of his judgment, Viscount Haldane pointed out that the controversy in that case arose over the answers to certain questions relating to the right of fishing in the tidal waters of the province of Quebec. Those questions had been submitted to the 31. Watts v. Watts, [1908] A.C. 573. 32. S.C. 1886, c.25; S.C. 1888, c.33. 33. See Board v. Board, [1919] A.C. 956 and Walker v. Walker, [1919] A.C. 947. The prairie provinces probably, by reason of their later date, were fortunate in obtaining from England an improved variety of divorce. Some indication of British Columbia's unfortunate plight in relation to divorce can be obtained by reading the judgments of the respective judges of the Supreme Court of Canada in Hellens v. Densmore, [1957] S.C.R. 768. 34. S.C. 1930, c.14, now R.S.C. 1952, c.85. 35. [1921] 1 A.C. 413.

Jackett: foundations of Canadian Law

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provincial court by the Lieutenant Governor in Council, and read as follows: (1) Has the Governor of the Province of Quebec ... power to grant the exclusive right of fishing . . . in the tidal waters of the rivers, streams, gulfs, bays, straits or arms of the sea of the Province, and of the high seas washing its coasts, to a distance of three marine miles from the shore: (a) between high-water mark and low-water mark; (b) beyond low-water mark, and if in the affirmative, to what extent? (2) Can the legislature of the Province authorize the Government of the Province ... to grant the exclusive rights of fishing set forth in the preceding question. (3) If there existed heretofore, or if there still exist restrictions upon the granting of exclusive rights of fishing in the tidal waters as aforesaid, and if such restrictions have been or are abolished, are the fisheries in such waters, after such abolition, the property of the Province, and has the legislature or the Government of the Province ... the powers mentioned in the preceding question with regard to these fisheries?

Viscount Haldane pointed out that these questions relate to the province of Quebec, where the common law is based on that of France, and that it was the circumstance that the common law of Quebec is different from that which obtained in the rest of Canada that gave rise to a distinction which had to be kept in mind. He pointed out that, if the common law of Great Britain had obtained, the points that had arisen would have been covered in some measure by decisions of the Privy Council in an appeal from British Columbia, Attorney-General for British Columbia v. Attorney-General for Canada,36 which had applied principles previously laid down by the Judicial Committee in Attorney-General for Canada v. AttorneysGeneral for a number of provinces. 31 Viscount Haldane summarized the principles laid down in these two cases. In his view the earlier case had emphasized that conferring legislative jurisdiction on the Dominion in relation to land did not thereby confer proprietary title upon it. Proprietary title in regard to rivers and other waters within a province in general remained provincial unless expressly transferred, and hence fishery rights attaching to ownership belonged to the province. But the Dominion's legislative power over fisheries might be used to affect provincial title drastically although it could not transfer the proprietary right which it does not possess. It could impose taxes and licenses; it could not grant a lease but it could impose conditions on any grant. The dominion Parliament 36. [1914] A.C. 153. 37. [1898] A.C. 700.

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Contemporary Problems of Public Law in Canada

has the exclusive power to regulate fisheries but the province might well have power to prescribe modes and conditions of conveyance. Viscount Haldane saw these principles further developed in the 1914 case. Where the public have a common-law right to fish, the legislature of British Columbia could not grant any exclusive rights, but where the right goes with the solum, as with inland lakes, the Dominion could only interfere by way of regulation. In regard to the former, dominion regulations could also apply. Their lordships avoided dealing with the question of ownership but saw that there was no doubt about the public's right to fish there and that since Magna Carta, which had come through the common law to British Columbia, this right could be altered only by a legislature of competent authority. Their lordships had excepted fishing by means of attachments to the soil which involves a use of solum and does not vest in the public. In non-tidal waters, navigable or not, fishing is the subject of property. Fishing in the sea, as a public right not depending on proprietary title, is subject to the Dominion's exclusive right to legislate and the province of British Columbia could not confer an exclusive right on one or more individuals. After thus summarizing the decisions of the Privy Council in the earlier fishery cases, Viscount Haldane pointed out that the questions which had had to be decided in 1914 were in certain important respects different from those which the Judicial Committee had then to decide in 1921. In particular, he pointed out, the questions raised in 1914 related to rights of fishing in British Columbia where the common law applicable was that of England whereas the common law applicable in Quebec is, generally speaking, the old French law as it was introduced into the territory of the province when it was subject to the rule of the King of France. It flowed from this, he intimated, that the provisions of Magna Carta, which are the foundation of the public right of fishing wherever the common law of England prevails, could not have any application to Quebec. Viscount Haldane pointed out that the French law applicable to the province of Quebec, so far as concerns the right of the public to fish in the waters of the province, had been modified by certain statutes competently passed, which statutes made it unnecessary to enquire into the precise character of the old French law. His analysis of the changes in the law which had been made is worth quoting : In order to find the powers under which these statutes were enacted, reference must be made to the relevant Acts of the Imperial Parliament. The first of these was the Quebec Act of 1774. This Act defined the boundaries

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of the large Province of Canada which had been called Quebec in the Royal Proclamation that followed on the cession effected by the Treaty of Paris. It then went on to declare that notwithstanding previous proclamations, commissions, ordinances, etc., in all matters of controversy relative to property and civil rights, resort was to be had to the existing laws of Canada as the rule for their decision, unless varied by ordinances passed by the Governor with the advice and consent of a Legislative Council to be set up by the Crown. The Criminal law was to be that of England. The effect of the Act was thus to retain or to reintroduce the old French law wherever applicable as to property and civil rights. In 1791, under another Act of that year, the Province of Quebec was divided into the separate Provinces of Upper and Lower Canada, and large powers of legislation were granted. The existing laws were to remain in force until altered, but power was given to the new Government to make laws for the peace, welfare and good government of their Provinces. In 1840, by a subsequent Act, the two Provinces were united into the single Province of Canada, which remained as such until confederation in 1867. This united Province possessed representative government from the beginning, and a little later on its government was made responsible also. Acting under the powers conferred on it, the Province of Quebec from time to time had passed laws regulative of fisheries. In 1788 a statute was enacted which declared that all the King's subjects should have the right to fish and to use the shores for that purpose over a large part of the river St. Lawrence and another river which emptied itself into the Bay of Chaleurs. The right extended to rivers, creeks, harbours and roads. This statute, in conferring the right to fish on the King's subjects generally, in the language it adopted, substantially followed the model afforded by the Newfoundland Fisheries Act of 1699, in which the policy of encouraging the people of Great Britain to go to Newfoundland, catch fish, and dry them on the shores and bring them back, was adopted. This policy explains the stress laid in the statute on fishing in the sea and using the banks for drying, etc. It extends, however, to the right to take bait and fish in rivers, lakes, creeks, harbours and roads generally, and rights similar for the purposes of this appeal were conferred by the series of fishery statutes passed in Canada in relation to Canadian waters. In 1807 a further statute was passed by the Government of the Province of Lower Canada under which the right to fish and land was further extended, with the saving of rivers, creeks, harbours, roads, and land which had been made private property by title derived from the King of England, or by grant prior to 1760, or by location certificate. In 1824 a similar Act was passed extending the right of the public to fish to the Inferior District of Gaspe and two named counties. Further Acts regulating the rights of fishing in the District of Gaspe were passed in 1829 and 1836, by the Legislature of Lower Canada. In 1841, after the union of Upper and Lower Canada, the right of all the King's subjects to fish in the waters of Gaspe was reaffirmed, and in 1853 the Legislature of the Province of Canada further declared the right of the King's subjects to fish to extend to the Gulf of the St. Lawrence. In 1857 an Act of the Province anew declared the right of the King's subjects to fish in all the waters and rivers of the Province, with the

24

Contemporary Problems of Public Law in Canada

exception of rivers lying within the territory known as the King's Posts, as to which it was provided that the Governor in Council might grant permission to fish in these rivers. In 1858, by another statute of the Province of Canada, the general right of the King's subjects was reaffirmed; but it was provided that the Governor-General might grant special fishing leases and licenses for lands belongng to the Crown, for any term not exceeding nine years, and might make such regulations as should be found necessary or expedient for the better management and regulation of the fisheries of the Province. In 1865 the Provincial Government of the united Provinces passed an Act for the amendment of the law and for the better regulation of fishing and protection of fisheries. It applied to the whole of Upper and Lower Canada without distinction between districts. By this statute the Commissioner of Crown lands might, under s.3, where the exclusive right of fishing did not already exist by law in favour of private persons, issue fishing leases and licences for fisheries and fishing wheresoever situated or carried on, and grant licences of occupation for public lands in connection with fisheries; but leases or licences for any term exceeding nine years were to be issued only under the authority of an order of the Governor-General in Council. By s.4 the Governor in Council might from time to time make regulations for the better management and regulation of fisheries, to prevent the obstruction and pollution of streams, to regulate and prevent fishing and to prohibit fishing except under leases and licenses. By s.6, which is headed "Deep Sea Fisheries," it was in the first place declared that every subject of the Sovereign might use vacant public property for the purpose of landing, salting, curing and drying fish, etc., and that: "All subjects of Her Majesty may take bait or fish in any of the harbours or roadsteads, creeks or rivers; subject always, and in every case, to the provisions of this Act as affects the leasing or licensing of fisheries and fishing stations, but no property leased or licensed shall be deemed vacant." Sec. 17 prohibits fishing in areas described in leases or licences now existing or hereafter to be granted. It, however, adds that the occupation of any fishing station or waters so leased or licensed for the express purpose of net fishing is not to interfere with the taking of bait used for cod fishing, nor prevent angling for other purposes than those of trade or commerce. In 1867 the British North America Act was passed, and in 1868 the Dominion Parliament repealed the Act of 1865 by s.20 of its Fisheries Act of 1868. The Act of 1865 was thus in force only for three years. Sec. 91 of the British North America Act, 1867, had conferred on the Dominion Parliament exclusive authority to legislate in regard to sea coast and inland fisheries, and it was under this authority that the repeal was effected. By the Fisheries Act of 1868 that Parliament sought to exercise its powers by enacting a number of provisions in many respects resembling those of the Act of 1865, and by further regulating the exercise of both public and private rights of fishing throughout the Dominion. The substance of this Act was incorporated into the subsequent Consolidated Statutes of Canada on the subject of fisheries. As to one of the sections, s.4, of the then Revised Statutes of Canada, c.95, so far as it purported to empower the grant of fishery leases conferring an exclusive right to fish in property

Jackett: Foundations of Canadian Law

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belonging not to the Dominion but to a Province, it was held by this Board, in the case before them in 1898, that the Dominion had no power to pass it. Their Lordships think that this is now settled law. 38 The balance of the judgment consists of discussion and determination of the question whether the provincial government had power to grant an exclusive right of fishing in tidal waters under the powers existing after 1867 and is not particularly germane here. Thus we have looked at three illustrations of the role played by our constitutional history in the development of our domestic law: 1. Criminal Law: where a combination of the common law and statutory rules of English law has been almost, but not quite, entirely replaced by a Canadian code, 2. Divorce: where an English statutory scheme has been introduced as it is as of whatever date happens to have been thrown up by historical circumstances, 3. Fisheries: where the common law-English or French, as the case may be-survives with statutory modifications carried forward from all stages of development. There are many other illustrations of the results that can flow from a legal development such as ours. There is the enactment of the legislature of the old province of Canada under which a witness in Upper Canada could be subpoenaed by a court in Lower Canada to appear in the court in Lower Canada-and vice-versa. 39 This law, which could not validly be passed today by the legislature of Ontario or the legislature of Quebec (because neither legislature can make laws with operative effect in the territory of the other province) is nevertheless carried forward as part of the law of each province. This fact is noted in the Ontario Evidence Act,40 which reprints the whole text of this pre-confederation statute and the citation of a modern case (1956) where it is discussed. Another example is the law of the old province of Canada by which the Crown is deprived of its prerogative to be paid in priority to other creditors on the administration of an estate.41 The provincial legislature purported to replace this provision by s.30 of the Trustee Act. 42 While the provincial legislature could not make such a law binding on the Crown in right of Canada, this law, having its source in pre-Confederation days, when there was 38. 39. 40. 41. 42.

[1921) 1 A.C. 413, at 423 et seq. Consolidated Statutes of Canada, 22 Viet. (1859), c.79. R.S.O. 1960, c.125. Stat. of Upper Canada, 29 Viet. (1865), c.28, s.28. R.S.O. 1877, c.107.

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Contemporary Problems of Public Law in Canada

no legislative division in Canada, is probably binding on the Crown in right of Canada. To the extent that the Ontario legislature could not enact it, it could not repeal it and, to that extent, the old preConfederation act remains in force. There is, thirdly, the statutory trust in favour of clergymen in Ontario and Quebec which had its origin in a statute of the old province of Canada whose legislature had jurisdiction in both Upper and Lower Canada. That trust could not, after Confederation, be changed by the legislature of either province. 43 One final reference to the constitutional authorities may illustrate the type of problem which can arise in the peculiar circumstances existing in this country. In Attorney-General for Ontario v. AttorneyGeneral for the Dominion 44 the Judicial Committee of the Privy Council had to deal with a number of questions. One question arose out of the fact that the Canada Temperance Act of 1886 contained an express repeal of the prohibitory clauses of a pre-Confederation act of 1864. The constitutional cases relating to the respective powers of Parliament and the provincial legislatures to prohibit or regulate the use of intoxicating liquors are sufficiently complicated that no simple statement by way of dicta can be applied without reference to many other so-called liquor cases but, subject to the caveat, a passage from the judgment delivered by Lord Watson is of considerable assistance in appreciating the relationship of the federal legislative power to the provincial legislative powers in Canada as well as the relationship of the post-Confederation legislative powers in Canada to the preConfederation powers: It has been frequently recognized by this Board, and it may now be regarded as settled law, that according to the scheme of the British North America Act the enactments of the Parliament of Canada, in so far as these are within its competency, must override provincial legislation. But the Dominion Parliament has no authority conferred upon it by the Act to repeal directly any provincial statute, whether it does or does not come within the limits of jurisdiction prescribed by s.92. The repeal of a provincial Act by the Parliament of Canada can only be effected by repugnancy between its provisions and the enactments of the Dominion; and if the existence of such repugnancy should become matter of dispute, the controversy cannot be settled by the action either of the Dominion or of the provincial legislature, but must be submitted to the judicial tribunals of the country. In their Lordships' opinion the express repeal of the old provincial Act of 1864 by the Canada Temperance Act of 1886 was not within the authority of the Parliament of Canada. It is true that the Upper 43. See Dobie v. Temporalities Board (1881), 7 A.C. 96. 44. [1896] A.C. 348.

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Canada Act of 1864 was continued in force within Ontario by s.129 of the British North America Act, "until repealed, abolished, or altered by the Parliament of Canada, or by the provincial legislature," according to the authority of that Parliament, "or of that legislature." It appears to their Lordships that neither the Parliament of Canada nor the provincial legislatures have authority to repeal statutes which they could not directly enact. Their Lordships had occasion, in Dobie v. Temporalities Board, to consider the power of repeal competent to the legislature of a province. In that case the Legislature of Quebec had repealed a statute continued in force after the Union by s.129 which had this peculiarity, that its provisions applied both to Quebec and to Ontario, and were incapable of being severed so as to make them applicable to one of these provinces only. Their Lordships held that the powers conferred "upon the provincial legislatures of Ontario and Quebec to repeal and alter the statutes of the old parliament of the Province of Canada are made precisely co-extensive with the powers of direct legislation with which these bodies are invested by the other clauses of the Act of 1867"; and that it was beyond the authority of the legislature of Quebec to repeal statutory enactments which affected both Quebec and Ontario. The same principle ought, in the opinion of their Lordships, to be applied to the present case. The old Temperance Act of 1864 was passed for Upper Canada, or, in other words, for the province of Ontario; and its provisions, being confined to that province only, could not have been directly enacted by the parliament of Canada. In the present case the parliament of Canada would have no power to pass a prohibitory law for the province of Ontario; and could therefore have no authority to repeal in express terms an Act which is limited in its operation to that province. In like manner, the express repeal in the Canada Temperance Act of 1886, of liquor prohibitions adopted by a municipality in the province of Ontario under the sanction of provincial legislation, does not appear to their Lordships to be within the authority of the Dominion Parliament. The question must next be considered whether the provincial enactments of s.18 to any, and if so to what, extent come into collision with the provisions of the Canadian Act of 1886. In so far as they do, provincial must yield to Dominion legislation, and must remain in abeyance unless and until the Act of 1886 is repealed by the Parliament which passed it. 45 With this outline of the relevant history and some illustrations of the effects of, and the problems arising from, our history, some thoughts of a general nature may be hazarded about the evaluation of statutes and judicial decisions, in the light of that history, when in search for the answer to a current legal problem. The basis for this evaluation is a concept of the common law which is derived from Maitland: This term common law, which we have been using, needs some explanation. I think that it comes into use in or shortly after the reign of Edward the First. The word "common" of course is not opposed to "uncommon": rather 45. Ibid., at 366.

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Contemporary Problems of Public Law in Canada

it means "general," and the contrast to common law is special law. Common law is in the first place unenacted law; thus it is distinguished from statutes and ordinances. In the second place, it is common to the whole land; thus it is distinguished from local customs. In the third place, it is the law of the temporal courts; thus it is distinguished from ecclesiastical law, the law of the Courts Christian, courts which throughout the Middle Ages take cognisance of many matters which we should consider temporal matters-in particular marriages and testaments. Common law is in theory traditional law-that which has always been law and still is law, in so far as it has not been over-ridden by statute or ordinance. In older ages, while the local courts were still powerful, law was really preserved by oral tradition among the free men who sat as judges in these courts. In the twelfth and thirteenth century as the king's court throws open its doors wider and wider for more and more business, the knowledge of the law becomes more and more the possession of a learned class of professional lawyers, in particular of the king's justices. Already in John's reign they claim to be juris periti. More and more common law is gradually evolved as ever new cases arise; but the judges are not conceived as making new law-they have no right or power to do that-rather they are but declaring what has always been law. 46

The starting point, therefore, is an assumption, or a theory, or a fiction if you will, that the common law of England is a comprehensive body of rules by reference to which every conceivable problem can be determined. Only a small portion of that body of rules has at any particular time been "found" and set forth in judicial decisions for our guidance. The rest remains to be found and applied from time to time as circumstances require. It follows that, in theory at least, the common law never changes. When a rule of the common law is found and enunciated for the first time, that is not a new law. It has always been the law but is now found for the first time. When the ultimate court of appeal overrules a line of cases in the lower courts and enunciates a rule that was never enunciated before, that is not a change in the law. The law was always as it is now revealed to 'Us and we were in error, prior to the new decision, in thinking that it was something else. As a practical fact, whenever the ultimate court of appeal enunciates a rule which was never enunciated before, something new has been created; in fact, a new rule of law has been added to the body of rules that previously existed or one of the old rules that existed in fact has been altered or abrogated. However it is the theory of our system of law that the ultimate court of appeal is finding and expounding the true rule of the common law as it has always been. This somewhat theoretical approach becomes important in deter46. Maitland, The Constitutional History of England, 22-23.

Jackett: Foundations of Canadian Law

29

mining what body of law was introduced into various parts of Canada as of various dates in our history. It would appear that, in so far as the common law is concerned (and this of course includes the rules of equity) there is only one body of rules and it is the same whether it was introduced into our provinces in 1792, 1870, or 1962. The common law is a developing system of law in the sense that there is a continuing process of development and exposition of its rules. The rules accepted into Ontario in 1792 were not merely the rules that were stated or misstated as of that time but all the rules of the common law as they have been now or may utimately be found to be. Any other theory would involve our having accepted a stunted and misshapen body of jurisprudence as the foundation for our legal system. This leaves open, however, questions about which tribunal, if any, has the final authority to expound the true view about any particular rule of the common law, and what theory is to be favoured as to the development of the doctrine of stare decisis since the abolition of appeals to the Judicial Committee of the Privy Council. Prior to 1949 we were told that the House of Lords had the final say on all legal problems in the Commonwealth. Our ultimate court of appeal is now the Supreme Court of Canada and it remains to be seen whether authoritative value or merely great respect is henceforth to be given to decisions of the House of Lords concerning the common law of England. My first rule therefore is that, in the absence of any statute of a legislature having jurisdiction in the matter, we resort to judicial decisions to find the appropriate common law rule and this includes all judicial decisions, whether made before or after the critical date. It is a matter for the proper application of the rules of stare decisis, in the event of conflict, to determine which decision, if any, is authoritative. If there is no authoritative decision on a particular question, the problem must be solved by a process of inductive reasoning from the decisions which command respect for their authoritative status or their intrinsic value. Secondly : we must examine the statutes constituting part of the laws of England as of the date when we adopted the laws of England in so far as such statutes were by their nature "applicable" to this region at that time. Subsequent statutes, as we have seen in the case of divorce, are not part of the imported body of law. With the statutes so adopted, we must consider English judicial decisions interpreting those statutes, whether those decisions were delivered

30

Contemporary Problems of Public Law in Canada

before or after the date of adoption of the laws of England but we must take care to note whether the decisions are based in any way on statutory amendments made after the significant date. The authority or weight to be attached to such judicial decisions will again depend upon the appropriate rules of stare decisis . Thirdly: we must apply all statutes or ordinances enacted by any appropriate legislative authority with jurisdiction in this region after the laws of England were adopted, including the statutes of the Canadian Parliament and of the provincial legislatures within their respective legislative jurisdictions. This includes Imperial legislation prior to the Statute of Westminster,47 made applicable here either expressly or by necessary implication. Before applying any such statute or ordinance, we must consider whether it has been validly repealed by any subsequent statute or ordinance. Finally: we must consider all relevant Canadian judicial decisions whether before or after Confederation and, in accordance with the appropriate rules of stare decisis, give to each of them such authority or respect as they command. This process of historical research is of course required only in the exceptional case. In the first place, the modern lawyer spends most of his time coping with the language of statutes enacted in his own time by his contemporaries and that task is difficult enough. In the second place, where one is required to embark on the seas of the common law and equity, there is usually no real problem as to the authority or weight to be given to the few authorities really applicable to the particular problem whether they be decisions of the Supreme Court of Canada, the House of Lords, or a provincial court of appeal. The path charted here is intended for those exceptional cases containing problems of real difficulty involving an appraisal of old statutes and the evaluation of judicial decisions of different jurisdictions.48 47. 22 Geo. V., c.4.

48. The substance of this essay was delivered as lectures by the Hon. W. R.

Jackett to students at Queen's University. With his permission it was modified into essay form by the editor who takes responsibility for any infelicities of style which may have resulted.

E. A. DRIEDGER

The~;canadian Bill of Rights

THE NATURE OF A BILL OF RIGHTS

Alexander Hamilton, in replying to the argument against the ratification of the Constitution of the United States because it did not include a bill of rights, said that "bills of rights are in their origin, stipulations between kings and their subjects, abridgements of prerogative in favour of privilege, reservations of rights not surrendered to the prince." Such indeed was the declaration presented by the Lords and Commons in England to William and Mary in 1688, although it was not officially designated as the "Bill of Rights" until it was given that name by the Short Titles Act of 1896. The first ten amendments to the Constitution of the United States are collectively known in that country as the Bill of Rights. This "Bill of Rights" does not fit Hamilton's definition. It is not a stipulation between a king and his subjects. Nevertheless, although differing in theory and somewhat in substance, these two bills of rights are essentially of the same character. They are both limitations on sovereign power, in the one case as wielded by the king and in the second as wielded by the Congress; they are both assertions of individual right against the power of the state. There is, however, an essential difference. In England, the Bill of Rights of 1688, as well as the other great charters of civil liberty, Magna Carta, the Petition of Rights of 1627, the Habeas Corpus acts, offer no protection to the individual against the legislative power of the state. The British Parliament could today validly repeal, amend, or override any provision of those charters. There is no legal remedy against the infringement by Parliament itself of civil liberties, rights, or freedoms. The protection or remedy is political, rather than legal, so that in the end

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Contemporary Problems of Public Law in Canada

the citizen must depend upon public opinion and the good sense of the legislators. The situation in the United States is different. There, the Bill of Rights curbs legislative power as well. Thus, the first amendment provided that Congress should make no law abridging the freedom of speech or of the press or the right of the people peaceably to assemble and to petition the government for a redress of grievances. This provision is an express denial of legislative power. Others took the form of a statement of a rule of law, as, for example, the fifth amendment, which provided in part that no person should be subject for the same offence to be twice put in jeopardy of life or limb, nor should he be compelled in any criminal case to be witness against himself. The effect of both kinds of amendments was the same, namely, to impose a limitation on the legislative power of Congress either by a direct prohibition or by the prescription of an unalterable law. There are some things that a bill of rights in the Hamiltonian sense is not. A bill of rights is not an instrument that will provide jobs, wealth, and security for everybody. During the course of the Canadian Bill of Rights through Parliament, suggestions were made that the Bill of Rights should guarantee to everybody such things as the right to work, the right to social security, the right to a share in the wealth of the nation. Obviously, a document declaring these rights will not create jobs or provide wealth or security. These things arise out of our whole economic structure. Work, trade, and resources, aided by specific legislation, create jobs and security. A bill of rights is therefore not an economic charter. Secondly, a bill of rights, at least as Hamilton understood it, is not an instrument designed to protect individuals from each other. If, for example, someone takes another's property, trespasses on his land, defames, or imprisons him, redress is not normally found in a bill of rights. Remedies for these transgressions are provided by our legal system, and if any of these things are done, the aggrieved person must bring an action in the courts against the persons who injured him. If the acts committed are of a kind that may also be detrimental to society as a whole, they may also be punishable under the criminal law. A bill of rights, therefore, is not primarily intended to regulate relations between individuals. The fundamental purpose of a bill of rights, and Hamilton correctly stated it, is to protect the individual against the power of the state. A bill of rights is based on the premise that the state should have no

Driedger: The Canadian Bill of Rights

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right to deprive a person of certain fundamental rights by any action that has no reasonable relation to any proper governmental purpose, or that is so far beyond what is necessary as to be an arbitrary exercise of governmental power. PROBLEMS FOR A CANADIAN BILL OF RIGHTS

When we talk of a bill of rights for Canada, what do we mean, what do we want, and how can we get it? If we mean a bill of rights like the one in England, plus the other related charters, then the answer is quite simple. We have it. This is part of our inheritance. However, it is clear that in so far as it is part of the laws in force in Canada, it is subject to alteration or abrogation at any time by Parliament or the legislatures of the provinces, according to their authority under the constitution, and we therefore must depend solely upon our political system for its maintenance. Is this good enough, in this day and age? Many people think not, and that we should have a bill of rights like the one they have in the United States. The theory of the United States Bill of Rights is that sovereignty vests in the people and Congress derives its authority from the people; certain residues of sovereignty have remained vested in the people, and they cannot therefore be exercised by Congress. This theory does not fit the monarchical parliamentary system of government that we have in Canada and in other parts of the Commonwealth. Under our theory, full sovereign power is vested in the Crown, although in fact it resides in Parliament. There is no overriding limitation on Parliament's powers in the United Kingdom. In Canada, where we have a federal state, each legislative body is supreme in its field. It is also well established that Parliament cannot limit itself, and that one parliament cannot bind future parliaments. It is apparent that there are a number of difficulties in the way of establishing in Canada the kind of bill of rights that there is in the United States. If we wish to limit Parliament's powers, how should we do it? We could, of course, abandon our present system of government and adopt a congressional system as in the United States. Alternatively, having derived our sovereign authority from the Parliament of the United Kingdom, we could return part of that sovereign authority and thus impose a limitation on the powers of Parliament or the legislatures. Another method would be to have a completely new constitution for Canada and the provinces, containing the desired

34

Contemporary Problems of Public Law in Canada

limitations on the powers of Parliament and the provincial legislatures, but the writing of a new constitution is not something that can be done overnight. In the face of these difficulties, how did we get a bill of rights, and what kind of bill of rights is it? To put it briefly, the Canadian Bill of Rights is in part a declaration and in part a rule of interpretation. The first section recognizes and declares that in Canada there have existed certain fundamental rights and freedoms. They include the right of the individual to life, liberty, security of the person, and enjoyment of property, and the right not to be deprived thereof except by due process of law. Freedoms are also included: freedom of religion, speech, assembly, and the press. The statute, in effect, declares that these are not new rights or freedoms, and that they have existed, but not by way of limitation on the legislative power of the state, as is the case in the United States. Something additional was done by s.2 of the Bill of Rights. This is a rule of interpretation. It provides in effect that an act of the Parliament of Canada shall be construed and applied so as not to abrogate, abridge, or infringe the fundamental rights and freedoms. The section goes on to particularize, setting forth a number of things that statutes must not now be construed to do. This rule of construction is to be overcome only by an express declaration that a statute is to operate notwithstanding the Canadian Bill of Rights. The enumerations in this section all have a familiar ring and it is perhaps fair to say that in some form or other these rules are now part of our law and were part of our law before the enactment of the Canadian Bill of Rights. The effect of this section, however, is that Parliament has enjoined the courts not to attribute to Parliament an intention to infringe fundamental rights and freedoms unless a prescribed formula is used. Parliament, of course, has complete jurisdiction to do so, but has said that an express declaration to that effect is required before such an intention is to be imputed to Parliament. The protection against Parliament overriding these fundamental rights and freedoms is political rather than legal. We must depend upon the good sense of our legislators, who in turn are policed by public opinion. AN ANALYSIS OF THE CANADIAN BILL OF RIGHTS

The Bill of Rights 1 is divided into two parts. It is not difficult to conclude that the division was made so that the more technical sec1. An Act for the Recognition and Protection of Human Rights and Fundamental Freedoms, S.C. 1960, c.44.

Driedger: The Canadian Bill of Rights

35

tions, 5 and 6, could be severed, and still leave a complete bill of rights. Section 5 includes a lawyer's definition of "law of Canada" that would baffle the layman, and s.6 is an amendment to the War Measures Act, which is really extraneous to the measure although it bears some relation to it. These sections could have been included in the instrument to be designated as the "Bill of Rights," but their inclusion in the Bill of Rights would be of little value to the general public, and would only complicate further what is already complicated enough. Section 1 reads as follows : 1. It is hereby recognized and declared that in Canada there have existed

and shall continue to exist without discrimination by reason of race, national origin, colour, religion or sex, the following human rights and fundamental freedoms, namely, (a) the right of the individual to life, liberty, security of the person and enjoyment of property, and the right not to be deprived thereof except by due process of law; (b) the right of the individual to equality before the law and the protection of the law; (c) freedom of religion; (d) freedom of speech; (e) freedom of assembly and association; and (f) freedom of the press.

This provision gives rise to a number of questions. Why was this recognition and declaration included, and what, if any, is the effect? One partial answer that comes to mind is that it was not desirable to make it appear to the general public and to other countries (especially the new independent countries) that the rights and freedoms set out in the Bill of Rights never existed before and were now being established in Canada for the first time. Has it, however, any other meaning or purpose? Clearly it has because it is tied to s.2. Section 2, which will be discussed below, refers to the abrogation, abridgement, or infringement of any of the rights or freedoms "herein recognized and declared." Section 2 of the Act therefore operates in relation to the rights and freedoms recognized and declared in s.1. This purpose could have been accomplished by incorporating the substance of s.1 in s.2, but that would have increased the complexity of s.2, and would not have explained to the world at large that these were not new. The question also arises whether the declaration is true. Many, if not all, of the rights and freedoms set forth in the British documents referred to above are part of the law of Canada. Furthermore, many of the specific rules set out in s.2 may be found in our laws. Thus,

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Contemporary Problems of Public Law in Canada

the rule against self-incrimination and double jeopardy were originally rules of the common law and are now included in the Criminal Code. The section covers both rights and freedoms. A freedom exists because of the absence of a restrictive law and it may therefore be said that we have freedom of religion, freedom of the press, freedom of speech, and freedom of assembly and association because there are no laws that prohibit us from exercising these freedoms. The section is also open to the construction that Parliament has put the stamp of approval on all existing laws and must therefore be taken to have recognized and declared that no law in force at the time the Bill of Rights became law is in conflict with the Bill of Rights. Some courts have so held (for example, Regina v. Gonzales) 2 but the point has not yet been settled by the Supreme Court of Canada. Robertson and Rosetanni v. The Queen,3 when the court had to consider whether the Bill of Rights rendered the Lord's Day Act inoperative, presented an opportunity, but the majority did not need to decide the point, holding as they did, that, by their terms, the two statutes were not in conflict. Cartwright J ., however, in a dissenting judgment, held that there was a conflict, and that the courts were obliged to refuse to apply the Lord's Day Act. It is submitted that the majority construction is unsound, and that Mr. Justice Cartwright's view is the correct one. In the first place, a statement that rights and freedoms have existed and do exist does not deny that infringements or violations have taken place or do exist. Secondly, as will appear below, it is clear from the terms of s.2 and s.5 that Parliament intended the measure to operate with respect to laws previously existing. More will be said about this point below. The phrase "without discrimination by reason of race, national origin, colour, religion or sex" deserves some comment. In the original bill as introduced in the House of Commons on June 27, 1960,4 these words did not appear in the opening words of the section, but they were included at the end of what is now paragraph (b). By an amendment in the House, they were moved upstairs, presumably so that they could operate on all of the lettered paragraphs. Grammatically, the original version was better. It qualified the word "right" in paragraph (b) and no doubt the courts would have had little difficulty in deducing the meaning of the phrase in that context. Now the phrase 2. (1962), 32 D.L.R. (2nd) 290. 3. (1964), 41 D.L.R. (2nd) 485. 4. Bill C-79, House of Commons of Canada, 3rd Session, 24th Parliament, 9 Elizabeth II, June 27, 1960.

Driedger: The Canadian Bill of Rights

37

qualifies the word "exist" in the opening words of the section, thus making the task of the judiciary in assigning a grammatical or substantive function to this phrase somewhat more difficult. The opening or general words of s.2 read as follows: 2. Every law of Canada shall, unless it is expressly declared by an Act of

the Parliament of Canada that it shall operate notwithstanding the Canadian Bill of Rights, be so construed and applied as not to abrogate, abridge or infringe or to authorize the abrogation, abridgement or infringement of any of the rights or freedoms herein recognized and declared, and in particular, no law of Canada shall be construed or applied so as to . . ..

This provision is clearly a rule of interpretation. Granted that Parliament cannot bind itself and cannot bind future parliaments, it may nevertheless lay down the rules that are to govern the interpretation and application of its own statutes. The Interpretation Act is a longstanding example of this technique. The Bill of Rights applies to "every law of Canada," which is defined in subsection 2 of s.5. The rule of interpretation prescribed by s.2 is to apply to all laws of Canada, unless it is expressly declared by an act of the Parliament of Canada that any of those laws shall operate notwithstanding the Canadian Bill of Rights. The effect of this provision therefore would appear to be to abrogate the two rules of inconsistency, namely, that a particular statute overrides a general statute and that a later statute overrides an earlier one. Is such a provision effective? Parliament has not said that its own powers are any the less, nor that a future parliament must not enact a conflicting law. Parliament has said only that certain intentions shall not be imputed to it unless a special form of words is used. This does not differ from s.16 of the Interpretation Act, which says that no provision or enactment in any act affects, in any manner whatsoever, the rights of Her Majesty, unless it is expressly stated therein that Her Majesty is bound thereby, and that Act also states that it applies to every act "now or hereafter passed." The injunction is that laws of Canada shall be construed or applied so as not to abrogate, abridge, or infringe the rights or freedoms set forth in the Bill of Rights. What is the difference between construing and applying? No doubt the courts will in due course determine the ambit of these words. Suffice it to say that there is a difference between the two. They are not the same and one alone would not accomplish as much as the two. Every statute is construed in the sense that it must be read and comprehended. It has been said that if a statute is plain there is nothing to construe, but how can one say that it is plain until it has been construed? Indeed, what is plain to

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Contemporary Problems of Public Law in Canada

one might not be plain to another. To the extent that a statute is a statement of law, requiring no implementation by any human agency, a statute may probably be said to be construed rather than applied. Courts construe statutes. If, for example, a section in a statute shifts an onus of proof, the courts would probably now "construe" the statute as not applying to criminal cases. To apply a statute could mean something else. Those having statutory powers, for example, apply the statute to actual circumstances. Administrators, who may have no actual statutory powers, also apply statutes in the sense that they carry them into effect. These persons-that is to say, authorities having statutory powers and public administrators-may have no power to construe a statute authoritatively in the sense that they can bind others by their interpretation of the statute. But they must make up their minds as to what the statute says and carry it into effect. The word "apply" therefore appears to suit them better than the word "construe." There may also be cases in which a statute is plainly in conflict with the Bill of Rights and, if it is to be construed at all, cannot be construed in any other way. Thus, a statute may provide that every accused in a criminal case is a compellable witness, or that a person charged with a criminal offence is presumed to be guilty until he proves that he is innocent. In the face of the Bill of Rights, the courts may refuse to construe the statute. On the other hand, they might feel that if the statute is so plain they have no choice but to const~e it for what it says. Here the word "apply" might come into play, and although the statute cannot be construed in any other way, they might not "apply" it to the particular case. A more detailed analysis of this situation will be made below. Finally, it must be remembered also that s.2 applies not only to statutes and regulations, but also to rules of the common law. Does one construe or apply a common law rule that is not to be found in any statute? It would seem that the word "apply" would be more appropriate here. Laws must also be construed so as not to authorize the abrogation, abridgement, or infringement of rights or freedoms. This is clearly aimed at power to make regulations or other forms of subordinate legislation. Whatever the statute may say, it must not be so construed or applied as to authorize subordinate legislation that infringes the Bill of Rights. This could also apply to persons exercising statutory powers not involving the making of subordinate legislation. One might ask why Parliament did not repeal all laws inconsistent

Driedger: The Canadian Bill of Rights

39

with the Bill of Rights, either by an express amendment to the offending statute or regulation or by one general provision. It is submitted that very few, if indeed any, such provisions can be found. Our lawmakers have, fortunately, been reasonably respectful of fundamental rights and freedoms. But the purpose and effect of the Bill of Rights, in relation to existing laws, goes far beyond the mere repeal of those provisions that can be recognized on their face as being repugnant to the Bill of Rights. For example, suppose a statute authorizes a minister to conduct an inquiry, to examine witnesses, and to make a finding. On its face, such a provision is not contrary to the Bill of Rights. There could therefore be no specific amendment to make it consistent with the Bill of Rights, and any general repeal clause would have no effect upon it. In the past, in exercising his powers, the minister might well have denied a person the rights he now has under the Bill of Rights. Now he cannot do so. He is prohibited from "construing" the Act to give him these powers, or, if you will, from so "applying" the Act. Suppose that a statute provides for the forfeiture of goods. Standing alone, that provision is not contrary to the Bill of Rights. However, it would leave open the question whether that statute imposes an automatic forfeiture by law or whether there must be a judicial determination of the facts giving rise to forfeiture. Now, under the Bill of Rights, it is clear that there cannot be a deprivation of property except by due process of law. The meaning of our "due process" clause has not yet been settled by the courts but, if American precedents are to be followed, it goes beyond "due procedure" (that is, in accordance with existing law) and operates to protect against legislative arbitrariness. The Bill of Rights may therefore have given a new meaning to forfeiture clauses, a meaning that could not be imported by a repeal provision. Many statutes authorize the Governor in Council to make regulations in terms that are not contrary to the Bill of Rights. An act may in general terms authorize regulations to be made, as for example, "to carry out the purposes and provisions of this Act," or may authorize regulations with respect to particular matters, as for example, "with respect to the issue and cancellation of licenses." Such provisions in a statute would not be contrary to the Bill of Rights, but their language is wide enough to authorize the making of regulations that are inconsistent with the Bill of Rights. In these cases, a repeal clause of the kind under discussion would have no effect, but the Bill of Rights will now operate to cut down the authority in the particular

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Contemporary Problems of Public Law in Canada

statute. A regulation-making authority will now be restricted, not only by the terms of the authorizing statute, but also by the Bill of Rights. The general words of s.2 are followed by a series of specific injunctions. They could have been separated from the general provision and made into a separate subsection, but if that had been done it would have been necessary to repeat the twenty-three word "unless" clause and to add a cross-reference to the general provision, with perhaps an additional provision, to make it clear that the enumerated provisions are but specific items that are to be regarded as being included in the rights and freedoms set forth in s.1. As it is, the provision is shorter, less complicated, and less likely to give rise to difficulty in ascertaining the scope and effect of the Bill of Rights. We now come to consider the position where there is a possible case of an infringement. There are two situations: one, where the questionable law was in force at the time the Bill of Rights was enacted, and the other where it is enacted subsequently but without the express declaration contemplated by s.2. In both cases we must first apply the rule of construction in the Bill of Rights, and construe or apply it as not infringing the Bill of Rights. If another construction is open, or if the language allows a narrower interpretation consistent with the Bill of Rights, no doubt the courts would give it such other or restricted interpretation. Perhaps the courts would do so without the Bill of Rights, but now they are required to do so. But what if the words used can bear no other construction? Suppose, then, that we do find a "clear" conflict between the Bill of Rights and a provision in a statute in force at the time the Bill of Rights was enacted-for example, a provision expressly authorizing a forfeiture without a hearing, judicial determination, or compensation. What would the courts do? They could say, as has already been indicated, that Parliament, by s.1 of the Bill of Rights, has confirmed such a provision and it is to be inferred, therefore, that it is not regarded by Parliament as being contrary to the Bill of Rights. It is submitted that this view is contrary to the express terms of the Bill of Rights. Section 5 makes it quite clear that the Bill of Rights is to apply to laws then in force, and there is nothing in it to suggest that it should not have full effect according to its terms. Parliament has expressly said that all laws in force at the time the Bill of Rights was enacted shall be construed and applied so as not to abrogate, abridge, or infringe any of the rights or freedoms therein recognized and declared. If this cannot be done, except by cutting down, even to the

Driedger: The Canadian Bill of Rights

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zero point, the ordinary meaning of a provision, then, it is submitted, the courts must so cut the meaning down. It can hardly be supposed that Parliament intended merely that where there is a choice the one more favourable to the subject shall be chosen, because the courts could and probably would do that anyway apart from the Bill of Rights, and there would then be little if any purpose in expressly making it apply to existing laws. Assuming that the courts have found that certain provisions of pre-existing laws are inconsistent with the Bill of Rights, have they been repealed, or what is the position? Clearly they would henceforth be inoperative, at least with respect to the particular facts before the court, but it is submitted that they could not be regarded as repealed in the same sense as if Parliament had repealed them. Even in a "clear" case, situations could arise where the provision could have some effect. In the example just given, one court might hold the provision ineffective with reference to the forfeiture of an automobile. In another case, if American precedents were followed, another court might hold that it was effective to authorize the forfeiture of dangerous or illicit goods, as, for example, explosives or narcotics, or of goods having no intrinsic value. Again, there might be cases where one section is in part inconsistent with the Bill of Rights, but in part not; the section could not be regarded as having been repealed because the courts could ignore the inconsistent part and give some effect to the remainder. The Bill of Rights, of course, does not say that inconsistencies are repealed, and it has here already been indicated why such a provision would not accomplish the same end as the actual terms. The situation appears to be similar to a case where valid provincial legislation ceases to be operative by reason of subsequent conflicting federal legislation. There is another circumstance that is relevant in this connection. A statute enacted after the Bill of Rights must have an express overriding declaration in it; a statute enacted before the Bill of Rights could not have included such a declaration. Is this not an indication that the Bill of Rights was intended to override previously existing legislation according to its terms? Suppose now that a statute is enacted that appears to be in direct conflict with the Bill of Rights, but there is no express declaration that it shall operate notwithstanding the Bill of Rights. The courts could say that the new statute is completely ineffective, but it is difficult to believe that the courts would say Parliament has gone through a useless exercise. Perhaps they would only go so far as to

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Contemporary Problems of Public Law in Canada

refuse to apply the statute to the specific facts before them, leaving it to another court to deal with any new or different situation that might arise. Perhaps the courts would say that such a statute is the equivalent of an express declaration that it shall operate notwithstanding the Bill of Rights. Section 3 of the Bill of Rights reads as follows: 3. The Minister of Justice shall, in accordance with such regulations as may be prescribed by the Governor in Council, examine every proposed regulation submitted in draft form to the Clerk of the Privy Council pursuant to the Regulations Act and every Bill introduced in or presented to the House of Commons, in order to ascertain whether any of the provisions thereof are inconsistent with the purposes and provisions of this Part and he shall report any such inconsistency to the House of Commons at the first convenient opportunity.

The Regulations Act in effect defines a regulation to mean a rule, order, regulation, by-law, or proclamation made in the exercise of a legislative power conferred by or under an act of Parliament, or one for the contravention of which a penalty of fine or imprisonment is prescribed by or under an act of Parliament. The regulations under that Act provide that drafts of proposed regulations must be submitted to the clerk of the Privy Council before they are made. They are then examined by an officer of the Department of Justice and if any provision is found that appears to be inconsistent with the Bill of Rights, that view is brought to the attention of the regulationmaking authority and it may then be changed before the regulation is made. Thus, the Bill of Rights operates silently and effectively to control those to whom the power to legislate has been delegated. Section 3 applies to every bill introduced in or presented to the House of Commons. It therefore includes private bills as well as public, and government bills as well as private members' bills. It also includes bills introduced in the first instance in the Senate, because they must be presented to the House of Commons. All government bills are prepared in the Department of Justice and officers of the Department of Justice are likely to recognize any proposals that would be contrary to the Bill of Rights, and during the drafting stages can take care to see that the proposed bill does not contravene the Bill of Rights. Bills introduced by private members are not seen normally until they have been introduced, but as soon as they are available they are examined in the Department of Justice. These procedures have now been formally crystallized in regulations made under s.3 of the Bill of Rights. The clerk of the House of

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Commons sends to the minister of justice copies of every bill introduced in or presented to the House of Commons, not only government bills but also bills presented by private members. Each bill is examined in the Department of Justice in order to determine whether any of the provisions thereof are inconsistent with the purposes and provisions of the Canadian Bill of Rights. A certificate is attached to copies of the bill stating that the bill has been examined as required in the Canadian Bill of Rights; one copy of the bill so certified is transmitted to the clerk of the House of Commons and another copy so certified is transmitted to the clerk of the Privy Council. If the minister finds that a bill does contain provisions inconsistent with the purposes or provisions of the Bill of Rights, he is required to make a report to the House of Commons. It is not at all likely that the minister of justice would so find in the case of a government bill. It is "purified" in the drafting stages by the officials, before it has become a bill, and it is also examined by the legislation committee of the Cabinet, and the Cabinet itself, before it is introduced. In the case of government bills, therefore, the Bill of Rights has operated effectively before the measure crosses the threshold of Parliament. A similar procedure has been laid down for regulations. Copies of regulations are submitted to the deputy minister of justice and under the regulations just described they are examined and certified as in the case of bills. A certified copy of the regulations is transmitted to the clerk of the Privy Council for his records. The regulations under the Bill of Rights also provide that if the minister finds any inconsistency he shall make a report to the clerk of the House of Commons in accordance with Standing Order 40 of the House of Commons, which prescribes the procedure for tabling documents, at the earliest convenient opportunity. The House of Commons may then take such action as it considers appropriate. The certificate that is attached to regulations and bills does not certify that the regulation or bill, as the case may be, is or is not consistent with the Bill of Rights; it merely states the fact that it has been examined as required by the Bill of Rights. If any inconsistency is found, it would be reported to the minister of justice, and he would then have to decide whether in his opinion there is any such inconsistency as may be reported or suggested to him and if he finds that there is, duly report the matter to the House of Commons. This has not yet happened. So far as future laws are concerned, whether statutes or regulations, the Bill of Rights has operated before they see the light of day.

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Section 4 of the Bill of Rights is merely a short title for Part I. The effect of it is that only the first four sections of the measure are formally part of the instrument entitled "Canadian Bill of Rights." Section 5 reads as follows: 5. {1) Nothing in Part I shall be construed to abrogate or abridge any human right or fundamental freedom not enumerated therein that may have existed in Canada at the commencement of this Act. (2) The expression "law of Canada" in Part I means an Act of the Parliament of Canada enacted before or after the coming into force of this Act, any order, rule or regulation thereunder, and any law in force in Canada or in any part of Canada at the commencement of this Act that is subject to be repealed, abolished or altered by the Parliament of Canada. {3) The provisions of Part I shall be construed as extending only to matters coming within the legislative authority of the Parliament of Canada.

Subsection 1 is merely a saving provision and makes it clear that any rights or freedoms not enumerated in ss.1 or 2 are not abrogated. Subsection 2 is a definition of the expression "law of Canada" as used in s.2. It means, first of all, an act of the Parliament of Canada or any order, rule, or regulation thereunder. This is not enough to cover the whole field because there may well be in force today statutes that were enacted by the legislatures of any of the pre-confederation provinces, and they are not acts of the Parliament of Canada. Such statutes are therefore also included, but since they may now be within the jurisdiction of Parliament or of the legislatures, it is necessary to qualify the reference to pre-confederation statutes so as to confine them to those that are within the jurisdiction of Parliament. A reference to laws of the Parliament of Canada, and pre-existing laws within Parliament's jurisdiction, however, is still not enough to cover the entire field. There may be rules of the common law that are part of the law of Canada but are not spelled out in any enactment. The reference therefore is to law in force rather than act in force, as it is in s.129 of the British North America Act. Subsection 3 makes it clear that Parliament has not attempted to go beyond its jurisdiction. The declaration in s.1 is unlimited and it could be argued that Parliament has attempted to establish a bill of rights within the provincial sphere of jurisdiction. Subsection 3 of s.5 makes it clear that this is not so, and that Parliament has intended to legislate only within its sphere of jurisdiction. Perhaps the courts would so have construed s.1 anyway, but it is now abundantly clear the Parliament has not attempted to invade provincial spheres of jurisdiction. It might be thought that subsections 2 and 3 overlap, and even that there might be some inconsistency between them.

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Subsection 3 has no bearing on subsection 2, and there is no common ground between them. Subsection 2 applies only to s.2 because it defines "law of Canada" in Part I, and s.2 is the only place where that expression is used. Section 2, when read with subsection 2 of s.5, is by its very terms limited to the area of Parliament's jurisdiction, so that subsection 3 of s.5 can have no application to it. That leaves only s.1 to which subsection 3 of s.5 can have any application. Section 6, which need not be quoted here, is an amendment to the War Measures Act 5 to provide, in effect, that a proclamation must be issued to bring the War Measures Act into effect. As the War Measures Act previously stood, the issue of a proclamation was conclusive evidence of war, invasion, or insurrection but not a necessary step to bring the Act into force. The amendment also provides for submission of the proclamation to Parliament, an opportunity for debate, and for a resolution revoking the proclamation. CRITICISMS

It has been urged by many that the Bill of Rights should have been enacted as an amendment to the British North America Act, the argument being that it could then apply within provincial as well as the federal areas of jurisdiction, and it could also be made a restraint on legislative power, binding on Parliament and the legislatures. There is an initial practical difficulty. Such an amendment, in accordance with current constitutional practices, would have to have the consent of all provincial governments, and one can only speculate how long that would take. Certainly longer than it took to enact what we have. It is submitted, however, that such an amendment alone would not have the desired effect. Under the Statute of Westminster,6 the appropriate legislative bodies in Canada (Parliament or the legislatures) may repeal or amend any act of the Parliament of the United Kingdom, except the British North America Acts, 1867 to 1930. Any amendment of the British North America Act made after 1931, whatever it may be called, is not included in the citation "1867 to 1930." There is a provision in our Interpretation Act that a citation of or a reference to an act shall be deemed to be a citation of or reference to the act as amended, but that provision does not apply to a British 5. R.S.C. 1952, c.288. 6. 1931, 22 Geo. V, c.4.

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act, and there is no corresponding provision in the British Interpretation Act. The citation "British North America Acts, 1867 to 1930" stands, and any subsequent enactment by the British Parliament, even if it extends to Canada, falls into s.2(2) of the Statute of Westminster. The result is that, even if such an amendment to the B.N.A. Act were made, Parliament could repeal it and could enact statutes inconsistent with it. More would be required to shackle the powers of Parliament. There would have to be an amendment also to s.7 of the Statute of Westminster. In other words, as was indicated earlier, we would have to hand some of our sovereignty back to its source, namely the British Parliament. The alternative would be a new constitution for Canada. The Bill of Rights has also been criticized for not containing penalties for violations. This criticism is founded on a misconception of the purposes and provisions of the Bill of Rights. The British Bill of Rights and the American Bill of Rights also contain no penalty clauses. As has been said, a bill of rights is aimed against the power of the state, and can be violated only by the state or a state agency. If an individual deprives another person of his property, that is not a violation of the Bill of Rights ; that is a trespass or a crime, the remedy for which is available under the ordinary law-a civil action for damages or possibly a prosecution for theft. How can the Bill of Rights be infringed, and what are the remedies? If it is done by the legislative power of the state, by Parliament, or by an authority to whom legislative power has been delegated, the legislation may be inoperative to that extent, as has already been indicated. In the United States, legislation contrary to the Bill of Rights would be declared by the courts to be ultra vires, because their Bill of Rights is a restriction on legislative power. Regulations could be declared ultra vires, if they cannot possibly be construed consistently with the Bill of Rights. There are, of course, many statutory powers other than legislative. If they are exercised contrary to the Bill of Rights, remedies are available. There are, first of all, the various prerogative writs to which resort may be had. In addition, an unauthorized act may be tortious or criminal, in which case there would be a remedy in the courts against the individual who exceeded his powers. The Crown is also liable for the torts of its servants or agents. If the Bill of Rights is "violated" by a judicial act, that is to say, if a court makes a wrong decision, the remedy must be by way of appeal or prerogative writ,

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up to the Supreme Court. If that court gives no remedy, then there was no wrong. Many persons may feel that the minister of justice should "police" the Bill of Rights and remedy supposed breaches. From time to time he is asked in the House of Commons whether he is aware that, for example, an accused person was not allowed to communicate with his lawyer, and whether he will look into the situation to see if there has been a violation of the Bill of Rights. It seems to be thought at times that the minister can investigate a situation and then order someone to stop violating the Bill of Rights, or to do something to remedy his breach thereof. The minister has no authority under the Bill of Rights to order anybody to do anything. Indeed, if he had arbitrary authority to conduct ex parte or extra-judicial investigations and power to issue mandatory orders, that in itself would be contrary to what we understand a Bill of Rights to be. The Minister has authority within his own shop, so to speak, under s.3, but that is as far as his duty, responsibility, and power go. The Bill of Rights is on the statute books and it is for the courts to enforce it. Any person who feels himself aggrieved must pursue his remedies himself in the courts. It has also been pointed out that few if any statutes or regulations have yet been struck down or modified in effect by reason of the Bill of Rights. It must, of course, be remembered that the British have had their Bill of Rights for 277 years, the Americans theirs for 174 years, and we ours for only 7. We need a little more time before we can assess the impact of our Bill of Rights. In any event, the success of a measure is not in direct proportion to the number of infractions. Rather the contrary. If there are no infractions, then presumably the Bill of Rights is doing its job. Hitherto, our legislators have on the whole respected fundamental rights and freedoms; as for the future they are now circumscribed by effective practical deterrents. One might ask why our Bill of Rights omits many of the provisions of the Universal Declaration of Human Rights, as approved by the General Assembly of the United Nations in 1948. Perhaps ours could have been more extensive. Perhaps some of the enumerated rights there are included in others of a more general nature. In any event, if a Bill of Rights is regarded as a restriction or limitation on state power, it would seem that many of the provisions of the Universal Declaration are not suitable for inclusion in a Bill of Rights. For example, article 23 provides that everyone has the right to work. Does this mean that an unemployed person can demand a job from

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the state or someone else? Article 16 provides that men and women of full age have the right to marry. Does this mean that a bachelor or spinster can demand a spouse? Clearly, these provisions are not, and are not intended to be, things that may be demanded from or denied by the state, but rather incidents of the society of which a state is composed. Many of the "rights" enumerated in the Universal Declaration have no effect by themselves; they require positive action for their realization. Thus, article 22 states that everyone has the right to social security, but that statement alone gives nobody anything. Article 21 provides for periodic and genuine elections, which shall be by universal and equal suffrage and by secret vote. An elections act is needed to give effect to this provision. If any of the rights included in the Universal Declaration but not included in the Canadian Bill of Rights exist-and some do-they exist in the body of our law, in our traditions, and in the kind of a civilization or society we have. The fundamental purpose of a bill of rights is to prevent undesirable legislation, and not to impose a duty to legislate. The Universal Declaration is partly designed for this purpose, but it is also a statement of the ideals of a civilized society, to be accomplished by whatever methods or means may be appropriate. In a broad way, it may be said that the three substantive sections of the Bill of Rights are aimed at the three traditional branches of government. Section 1 is a statement of principle that Parliament is expected to respect; s.2 is a direction to the judiciary as to the way in which pronouncements by Parliament are to be read, so as to ensure that the edicts of Parliament are construed and applied in accordance with the principles enunciated in s.1; and s.3 imposes upon the executive certain duties designed to prevent infringement of the Bill of Rights, or alternatively to shout from the housetops that it has been infringed. Until we get a new amending formula or a new constitution, it would seem that Parliament has done all it can to give fundamental rights and freedoms formal legal expression and to protect and safeguard them. As was said about Kansas City in the musical play Oklahoma-"They've gone about as fur as they can go."

E. A. TOLLEFSON

Freedom of the Press

the decision of the Supreme Court of Canada in the Alberta Press Bill case1 has been regarded as a signal victory for civil liberties in Canada. The case is not remembered for its ratio but for the sweeping dicta about how essential the communicative freedoms are in a democracy. Justified on the bases of freedom and democracy, who can oppose the decision? To attack it is to lay oneself open to the charge of advocating tyranny. Nevertheless, it is a bad decision, and bad decisions have an unfortunate tendency to beget worse decisions. A re-evaluation, even at this late date, therefore seems to be in order. In 1935, Alberta, like the rest of Canada, was in the depths of the Depression. Traditional economic solutions did not seem to provide any hope. At times such as this a protest vote can be expected; but Alberta already had a government which had been elected on a protest vote, and which seemed to be just as incapable of doing anything about the situation as the two old-line parties. Not only had the United Farmers of Alberta, in office since 1921, been buffetted by the storms of the Depression, but the party leader had been charged with seduction and forced by circumstances to step down while the case was before the court. Into this atmosphere of despair came Major Douglas and his theory of social credit, according to which the country did not have to depend upon the machinations of international financiers in order to establish a state of prosperity, but could print money and extend credit on the basis of the unused

FOR ALMOST THREE DECADES

1. In the Matter of Those Bills Passed by the Legislative Assembly of the Province of Alberta at the 1937 (Third Session) thereof, entitled respectively: "An Act Respecting the Taxation of Banks"; "An Act to Amend and Consolidate the Credit of Alberta Regulations Act"; and "An Act to Ensure the Publication of Accurate News and Information," [1938) S.C.R. 100.

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capacity of the country's people and industries to produce wanted goods and services. People did not completely understand the theory of social credit, but they were assured by Major Douglas's prophet, William Aberhart, that they did not have to understand. Using the homely comparison of electricity he said: You don't have to know all about Social Credit before you vote for it; you don't have to understand electricity to use it, for you know that experts have put the system in, and all you have to do is push the button and you get the light. So all you have to do about Social Credit is to cast your vote for it, and we will get the experts to put the system in. 2 Aberhart was an evangelical preacher and teacher who had a large personal following. When he used social credit as the basis of a political party he led it to a landslide victory in its first test at the polls. The Social Credit movement had never enjoyed a good press. Major Douglas believed that a sinister conspiracy existed between the closely knit press organization and international financial interests. When, in a last-ditch attempt to steal the thunder of Social Credit, the U.F.A. government hired Major Douglas in the spring of 1935 to be its chief reconstruction advisor, his first set of proposals included the setting up of an information service to counteract the unfavourable propaganda being directed against Social Credit theories. 3 The press continued its criticism when the Social Credit party formed the government of Alberta in the fall of 1935. In 1937, the government reacted by introducing II An Act to Ensure the Publication of Accurate News and Information." The Lieutenant Governor, without instructions from Ottawa, reserved assent in respect of this and two other bills. By agreement between the federal and the Alberta governments these bills were referred to the Supreme Court of Canada for a determination as to their constitutional validity. The purpose of the Press Bill as it is usually called, was described in its preamble as follows: WHEREAS it is expedient and in the public interest that the newspapers published in the Province should furnish to the people of the Province statements made by the authority of the Government of the Province as to the true and exact objects of the policy of the Government and as to the hindrances to or difficulties in achieving such objects, to the end that the people may be informed with respect thereto.

2. Quoted in C. B. Macpherson, Democracy in Alberta, 2nd ed. (Toronto: University of Toronto Press, 1962), at 152. 3. J. R. Mallory, Social Credit and the Federal Power in Canada (Toronto: University of Toronto Press, 1954), at 65.

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Now, Therefore, His Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Alberta, enacts as follows . ... The Bill then provided that every proprietor, editor, publisher, or manager of any newspaper published in the Province, .. . shall, when required so to do by the Chairman, publish in that newspaper any statement furnished by the Chairman which has for its object the correction or amplification of any statement relating to any policy or activity of the Government of the Province published by that newspaper within the next preceding thirty-one days.4 Such statements were not to exceed the length of the statement corrected thereby and were to be given the same prominence as to position, type, and space as the statement corrected thereby. 5 Immunity against libel actions based on the publication of such statements was afforded to the proprietor, editor, publisher, manager, or printer of the newspaper publishing the same, and to the employees of any such person, and to any persons who might subsequently publish such statements. 6 This provision bears a striking similarity to a provision which has existed in France since 1881, and which is known as "the right of reply." By this provision the director of a French newspaper or periodical is bound to insert within three days of receipt any corrections communicated to him by a public official with regard to acts, carried out in exercise of his office, which have been incorrectly reported by the said publication. A similar provision requires that the director insert within three days of receipt the reply of any person named or designated in the publication. Fines and imprisonment may be imposed if the reply is not inserted or if the reply is not given the same prominence as the original article.7 The second substantive provision of the Bill required newspapers to divulge their sources of information when required to do so by the chairman: 4. Every person who is the proprietor, editor, publisher, or manager of any newspaper, shall upon being required so to do by the Chairman in 4. Alberta, 1937 (Third Session), Bill 9, s.3(1).

5. Ibid., s.3( 4). 6. Ibid., s.5.

7. "Act concerning the Freedom of the Press of 29 July 1881," articles 12 and 13; Draft Act Regulating the Press, 1945, articles 65-72. For translation of text of these Acts see Freedom of Information (United Nations Department of Social Affairs, 1950), II, at 31, 52-53. For discussion of this aspect of French press law see Zechariah Chafee, Jr., Government and Mass Communications (Chicago: University of Chicago Press, 1947}, I, at 147-58. For the right of reply under the German Press Law of 1874 see Chafee, at 158-60.

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writing, within twenty-four hours after the delivery of such requirement at the office or usual place of business of any of the following persons, namely, the proprietor, editor, publisher or manager of the newspaper, make a return in writing setting out every source from which any information emanated, as to any statement contained in any issue of the newspaper published within sixty days of the making of the requirement and the names, addresses and occupations of all persons by whom such information was furnished to the newspaper, and the name and address of the writer of any editorial, article or news item contained in any such issue of the newspaper as aforesaid. The principal penalty was set out in s.6: 6. In the case the proprietor, editor, publisher or manager of any newspaper has been guilty of any contravention of any of the provisions of this Act the Lieutenant Governor in Council, upon the recommendation of the Chairman, may by order prohibit,(a) the publication of such newspaper either for a definite time or until further order; (b) the publication in any newspaper of anything written by any person specified in the order; (c) the publication of any information emanating from any person or source specified in the order.

Contravention of the provisions of the legislation would also constitute an offence punishable by a fine not to exceed $500 (or $1,000 in the case of a person contravening an order in council passed pursuant to s.6). 8 The "Chairman," who was to act as watchdog on the press, was none other than the chairman of the "Board" established under The Alberta Social Credit Act. 9 Newspapermen across Canada banded together to oppose the Press Bill. In the Supreme Court of Canada, two factums were filed by newspaper interests: one factum was filed by the Edmonton Journal, Calgary Herald, Lethbridge Herald, Edmonton Bulletin, Calgary Albertan, Medicine Hat News, and the Alberta division of the Canadian Weekly Newspaper Association; a second factum, containing similar arguments, was filed by the Canadian Press, Canadian Daily Newspapers Association, and Canadian Weekly Newspapers Association. Both factums cited a number of reasons why the Bill should be found to be beyond the powers assigned to the provincial legislatures by the B.N.A. Act: (1) the Bill was ultra vires because it was part of an over-all scheme which was ultra vires; (2) it did not deal with a matter of a purely local and private nature for newspapers 8. Supra note 4, s.7. 9. Ibid., s.2(a). The Alberta Social Credit Act was enacted in 1937 (first session), c.10.

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disseminate news beyond provincial boundaries; (3) newspapers fall within the scope of s.92(10): "Other works and undertakings connecting the province with any other province or provinces or extending beyond the limits of the province"; (4) the Bill properly fell within the sphere of the criminal law: sedition, criminal libel, and the spreading of false news were said to cover the same area; (5) it was ultra vires as it related to newspapers which were dominion companies; and (6) it constituted a delegation of the judicial function to the Lieutenant Governor in Council and the chairman of the Board, contrary to the provisions of ss.96, 99, and 100 of the B.N.A. Act. The factum filed by the federal government advanced the same arguments as were contained in the factums of newspaper interests, with the exception that no reliance was placed at this stage on the arguments respecting dominion companies and delegation of the judicial function. 10 The government of British Columbia also filed a factum but it submitted no argument. The factum submitted by the AttorneyGeneral of Alberta maintained that newspapers were like other businesses and therefore were subject to restrictions which might be imposed on their operation by the provincial government, and that the Bill was analogous to The Alberta Libel and Slander Act insofar as jurisdiction was concerned. The Supreme Court judges were unanimous in finding that all three bills referred to them were ultra vires. The majority felt that the Press Bill was ultra vires as forming a part of a scheme of legislation which was beyond the powers of the provincial legislature. Duff C.J.C., delivering the judgment for himself and Davis J., stated the reason for the decision in the following manner: We now turn to Bill No. 9. This Bill contains two substantive provisions. Both of them impose duties upon newspapers published in Alberta which they are required to perform on the demand of "the Chairman," who is, by the interpretation clause, the Chairman of "the Board constituted by section 3 of The Alberta Social Credit Act." The Board, upon the acts of whose Chairman the operation of this statute depends, is, in point of law, a non-existent body (there is, in a word, no "board" in existence "constituted by section 3 of The Alberta Social Credit Act") and both of the substantive sections, sections 3 and 4, are, therefore, inoperative. The same, indeed, may be said of sections 6 and 10. These two arguments were added to the factum of the federal government when the case was appealed to the Privy Council. The factum and case of the federal government are a goldmine of information about Social Credit.

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7, which are the enactments creating sanctions. It appears to us, further-

more, that this Bill is a part of the general scheme of Social Credit legislation, the basis of which is The Alberta Social Credit Act; the Bill presupposes, as a condition of its operation, that The Alberta Social Credit Act is validly enacted; and, since that Act is ultra vires, the ancillary and dependent legislation must fall with it. 11

Hudson J. concurred with the opinion expressed by the Chief Justice on this point,1 2 and Kerwin and Crocket JJ. found the Bill to be ultra vires on the same basis.13 Cannon J. spent some time showing that the Press Bill was a necessary part of the new Social Credit economic order, suggesting that "credit" comes from the Latin word credere, to believe, and that belief in the government plan necessarily involved control of the sources of information. But after expanding on this dubious etymological approach, Cannon J. came to no conclusion at all on whether the Bill was ultra vires of the province because of its relationship to the total Social Credit scheme; rather he concluded that the legislation was ultra vires because it invaded the domain of criminal law.14 This ratio decidendi is remarkable in several ways. In the first place, it depends upon a finding of invalidity of a statute not referred to the court. No question of the validity of The Alberta Social Credit Act was referred to the court, but the court nevertheless found it to be ultra vires. The effect of a finding of invalidity in such circumstances is open to question. A decision on a question referred to the court is theoretically only an opinion, but the Supreme Court Act of the day provided that "The opinion of the Court upon any such reference, although advisory only, shall, for all purposes of appeal to His Majesty in Council, be treated as a final judgment of the said Court between the parties." 15 The words "any such reference" clearly refer to "Important questions of law or fact . . . which may be referred by the Governor in Council to the Supreme Court for hearing and consideration ...." 16 This statement of the right of the Governor in Council to refer important questions to the Supreme Court is immediately followed by subsection 2 of s.55, which opens: "2. When any such reference is made to the Court it shall be the duty of the Court to hear and consider it, and to answer each question so referred . . . ." The result is that while the opinion has the status of a final judgment insofar as the questions referred to the court are concerned, lesser weight must be attributed to collateral findings. 11. [1938) S.C.R. 100, at 132. 13. Ibid., at 161-62. 15. R.S.C. 1927, c.35, s.55(6) .

12. Ibid., at 162-63. 14. Ibid., at 143-45. 16. Ibid., s.55(1).

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Having concluded that The Alberta Social Credit Act was ultra vires, the Court had no difficulty in finding that this Act was central to the whole range of economic legislation passed by the Alberta legislature in order to implement the theories of "social credit." The Court affirmed that because the central Act was ultra vires, "the ancillary and dependent legislation must fall with it." 17 But is such a conclusion correct? A preliminary objection is that ancillary legislation should not be found ultra vires on the basis of its relationship to a central act unless the determination of the invalidity of the central act is res judicata. In the Press Bill case, the finding with respect to The Alberta Social Credit Act was at most little more than dicta. A second objection is that ancillary or dependent legislation should not automatically become ultra vires upon a finding that the central act is ultra vires unless in pith and substance the ancillary or dependent legislation is itself in relation to a matter outside the jurisdiction of the legislative body which enacted it. Being dependent upon the existence of another act, the legislation may be denuded of any practical effect as the result of a finding that the principal act is ultra vires, but this is quite a different thing from saying that the legislative body in question did not possess the power to pass this legislation. Even if the ancillary legislation is clearly part of a scheme of legislation which is ultra vires in its ultimate goal or effect, why should the ancillary legislation be struck down if, viewed by itself, it is clearly intra vires? There must be many grand legislative schemes which are composed of many individual statutes, each contributing something to the ultimate goal. If the ultimate goal is ultra vires, is it sensible that each statute of the scheme should also be declared ultra vires regardless of its individual jurisdictional merits? Assuming for a moment that otherwise valid statutes are to be declared ultra vires by association, could the legislative body in question validly re-enact these statutes once the courts had destroyed the over-all scheme by a finding of ultra vires? Suppose that, following the decision of the Supreme Court, the Alberta legislature had re-enacted the Press Bill, investing the Attorney-General of Alberta with the powers which had been given in the original Bill to the chairman of the Social Credit Board.18 Would the new bill have been found ultra vires? The question of the validity of the Press Bill viewed independently of The Alberta 17. Supra note 11, per Duff C.J.C. and Davies J.

18. See infra. This course of action was suggested by 0 . M. Biggar K.C., senior counsel in the case for the Attorney-General of Alberta to J. J. Frawley, K.C., of the Alberta Attorney-General's Department in a letter dated March 4, 1938 (the day the judgment was delivered). Letter in files of Attorney-General for Alberta.

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Social Credit Act was left open by all members of the court other than Cannon J.19 If the legislation would be intra vires if re-enacted as an independent statute, what is the point of declaring it to be ultra vires in the first place? This leaves a factual question of whether the Press Bill formed part of the scheme of Social Credit economic legislation. Certainly it was dependent upon The Alberta Social Credit Act, but this by itself is innocuous. Yet apart from reference to this dependency, the majority of the members of the court were singularly reticent about their reasons for finding that the Press Bill formed parl of the general scheme of Social Credit legislation. Only Cannon J., who in the end did not rely on this argument, suggested any other reason for concluding that the Press Bill formed a necessary part of the scheme to provide new credit, saying that "It is, therefore essential to control the sources of information of the people of Alberta, in order to keep them immune from any vacillation in their absolute faith in the plan of the government." 20 It may be asked why the Press Bill should have been identified with legislation which was ultra vires when some of the intra vires legislation of the Social Credit government was also causing public concern and evoking bitter editorial comment. Certainly there was nothing in the Press Bill itself which would identify it as part of the ultra vires economic plans of the government, apart from the fact that the chairman of the Social Credit Board was the persona designata to act as watchdog on the press. Thus the ratio decidendi of the majority is open to serious question. What of Cannon J.'s alternative ratio: namely that the Press Bill was ultra vires as being legislation falling within s.91(27), Criminal Law and Criminal Procedure? Cannon J. gave two reasons for his finding that the Press Bill invaded the "domain of criminal law." 21 The first 19. Supra note 11, at 134-35 per Duff C.J.C. and Davies J.; at 163 per Hudson J. Although they do not say so explicitly, this also appears to have been left open implicitly by Kerwin and Crocket JJ. especially at 161-62. See also Kerwin J.'s statement in Saumur v. Quebec and the A.-G. for Quebec, [1953] 2 S.C.R. 299, at 324. See infra for discussion of this case. 20. Ibid., at 144. 21. Ibid., 144-46. It is questionable whether in fact there is a "domain of criminal law." Lord Atkin, in Proprietory Articles of Trade A ssociation v. A.-G. for Canada, [1931] A.C. 310, stated at 324: "Criminal law connotes only the quality of such acts or omissions as are prohibited under appropriate penal provisions by authority of the State. The criminal quality of an act cannot be discerned by intuition; nor can it be discovered by reference to any standard but one: Is the act prohibited with penal consequences? Morality and criminality are far from co-extensive; nor is the sphere of criminality necessarily part of a more

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reason was that the Criminal Code, in dealing with what constituted seditious words and publications, provided an exception with respect to bona fide criticism of the government: 133-A. No one shall be deemed to have a seditious intention only because

he intends in good faith,(a) to show that His Majesty has been misled or mistaken in his measures; or (b) to point out errors or defects in the government or constitution of the United Kingdom, or of any part of it, or of Canada or any province thereof, or in either House of Parliament of the United Kingdom or of Canada, or in any legislature, or in the administration of justice; or to excite His Majesty's subjects to attempt to procure, by lawful means, the alteration of any matter of state; or (c) to point out, in order to their removal, matters which are producing or have a tendency to produce feelings of hatred and ill-will between different classes of His Majesty's subjects. 22

His Lordship stated that the Press Bill was an attempt by the legislature of Alberta to amend the Criminal Code in this respect and to deny the advantage of the above section to Alberta newspaper publishers. Cannon J. fortified his argument that the impugned provision encroached on the federal power to repress sedition by reference to the historical fact that prior to Fox's Libel Act, 1792,23 criticism of the government was punishable in the United Kingdom as a criminal libel. His Lordship's judgment on this point is open to some serious objections. No doubt the Parliament of the United Kingdom could make criticism of the government a crime; but, being unhampered by the doctrine of ultra vires, it can declare anything to be a crime. The extensive field covered by morality-unless the moral code necessarily disapproves all acts prohibited by the State, in which case the argument moves in a circle. It appears to their Lordships to be of little value to seek to confine crimes to a category of acts which by their very nature belong to the domain of 'criminal jurisprudence'; for the domain of criminal jurisprudence can only be ascertained by examining what acts at any particular period are declared by the State to be crimes, and the only common nature they will be found to possess is that they are prohibited by the State and that those who commit them are punished." For a statement to the same effect, see Lord's Day Alliance of Canada v. A.-G. for British Columbia, [1959] 5.C.R. 497, at 508-509, per Rand J., delivering the judgment for himself, Cartwright, Martland, and Judson JJ. 22. R.S.C. 1927, c.36, as amended by 5.C. 1930, c.11. which introduced this provision as s.133A. 23. 32 Geo. III, c.60. For a discussion of the law of criminal libel for this period see Sir James Fitzjames Stephen, History of the Criminal Law of England (London: Macmillan, 1883), II, ch. 24.

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question is whether the Canadian federal government could make it a crime to criticize a provincial government. A strong argument could be advanced that such legislation was a colourable attempt to encroach on the exclusive jurisdiction of the provincial legislatures under 92(1), "The Amendment from Time to Time, notwithstanding anything in this Act, of the Constitution of the Province, except as regards the Office of Lieutenant-Governor"; 92(13), "Property and Civil Rights in the Province"; or 92(16), "Generally all Matters of a merely local or private Nature in the Province." Certainly the provinces have an acknowledged jurisdiction in relation to libel, which would seem to indicate that the provinces have a prima fade jurisdiction in relation to the publication of falsehoods and half-truths-the very mischief which the Press Bill was intended to remedy. Even Duff C.J.C. and Davies J. recognized that "there is a very wide field in which the provinces undoubtedly are invested with legislative authority over newspapers ...." 24 It would appear, therefore, that, at best, the federal government, by virtue of its power to repress sedition and punish criminal libel, may regulate only certain aspects of public discussion; and so long as the impugned enactment can be found to have a provincial aspect, the enactment should be valid and enforceable, unless its operation prevents the enforcement of federal legislation in the same field. 25 If the Press Bill had a provincial aspect (a question which Cannon J. did not consider), the Bill should not have been found invalid. It did not prevent the enforcement of the provisions of the Criminal Code, for s.133-A of the Code, which was relied upon by Cannon J., did not impose any penalty, but, instead, it declared an exemption from criminal liability. The fact that an act is not criminally culpable (because of either the silence of the Code or an express exemption 24. Supra note 11, at 134. 25. On this point see Re Section 92(4) of The Vehicles Act, Statutes of Saskatchewan, 1957, c.93, [1958] 5.C.R. 608; O'Grady v. Sparling, [1960] 5.C.R. 804; Stephens v. The Queen, [1960] 5.C.R. 823; Smith v. The Queen, [1960] 5.C.R. 776; Mann v. The Queen, [1966] 5.C.R. 238. For a most instructive commentary on the problem of legislative paramountcy see Laskin, "Occupying the Field: Paramountcy in Penal Legislation" (1963), 41 Can. Bar Rev. 234. It is interesting that Cannon J. did not refer to the then s.136 of the Criminal Code on the spreading of false news: "136. Everyone is guilty of an indictable offence and liable to one year's imprisonment who wilfully and knowingly publishes any false news or tale whereby injury or mischief is or is likely to be occasioned to any public interest." The Press Bill would appear to have covered this situation plus situations in which (a) the news was not false but only incomplete, (b) false news was not published knowingly or (c) no injury or mischief was or was likely to be occasioned to a public interest.

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contained therein) does not preclude the imposition of a provincial penalty for a provincial purpose.26 This was made clear by the Supreme Court in the Breathalyser case,27 in which provincial legislation, requiring a driver of a motor vehicle to give a sample of his breath on the request of a police officer, was held not to conflict with s.224(4) of the Criminal Code, which provides that no person is required to give a sample of blood, urine, breath, or other bodily substance for chemical analysis for the purposes of a prosecution for drunken or impaired driving. The Court held that the provincial enactment related to the provincial purpose of regulating highway traffic and was intra vires and enforceable even though the evidence so gained could be used in a prosecution under the Code for drunken or impaired driving. The second reason given by Cannon J. for finding the Press Bill ultra vires as being in relation to criminal law was that freedom of discussion of all matters affecting the state is the foundation of a democracy, and as such it is the birthright of all Canadians and can be curtailed only by the Parliament of Canada : Under the British system, which is ours, no political party can erect a prohibitory barrier to prevent the electors from getting information concerning the policy of the government. Freedom of discussion is essential to enlighten public opinion in a democratic state; it cannot be curtailed without affecting the right of the people to be informed through sources independent of the government concerning matters of public interest. There must be an untrammelled publication of the news and political opinions of the political parties contending for ascendancy. As stated in the preamble The British North America Act, our constitution is and will remain, unless radically changed, "similar in principle to that of the United Kingdom." At the time of Confederation, the United Kingdom was a democracy. Democracy cannot be maintained without its foundation: free public opinion and free discussion throughout the nation of all matters affecting the State within the limits set by the criminal code and the common law. Every inhabitant in Alberta is also a citizen of the Dominion. The province may deal with his property and civil rights of a local and private nature within the province; but the province cannot interfere with his status as a Canadian citizen and his fundamental right to express freely his untrammelled opinion about government policies and discuss matters of public concern. The mandatory and prohibitory provisions of the Press Bill are, in my opinion, ultra vires of the provincial legislature. They interfere with the free working of the 26. This is implicit in the cases cited in notes 25 and 27. See also comment of Cartwright and Fauteux JJ. in Saumur v. Quebec and the A.-G. for Quebec, supra note 19, at 385-86. See infra. 27. Re Section 92(4) of The Vehicles Act, Statute of Saskatchewan, 1957, c.93, [1958] S.C.R. 608. See comment on this case by the author in (1958), 23 Sask. Bar Rev. 78 and (1959), 2 Can. Bar]. 103.

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political organization of the Dominion. They have a tendency to nullify the political rights of the inhabitants of Alberta, as citizens of Canada, and cannot be considered as dealing with matters purely private and local in that province. The federal parliament is the sole authority to curtail, if deemed expedient and in the public interest, the freedom of the press in discussing public affairs and the equal rights in that respect of all citizens throughout the Dominion. These subjects were matters of criminal law before Confederation, have been recognized by Parliament as criminal matters and have been expressly dealt with by the criminal code. No province has the power to reduce in that province the political rights of its citizens as compared with those enjoyed by the citizens of other provinces of Canada. Moreover, citizens outside the province of Alberta have a vital interest in having full information and comment, favourable and unfavourable, regarding the policy of the Alberta government and concerning events in that province which would, in the ordinary course, be the subject of Alberta newspapers' news items and articles. 28 The Press Bill case now is remembered chiefly for Cannon J.'s eloquent words about the preamble of the B.N.A. Act and for similar dicta in the judgment of Duff C.J.C. and Davies J. that it was ultra vires of the provinces to abrogate or suppress "free public discussion of public affairs ... the breath of life for parliamentary institutions."29 The arguments based upon the preamble and upon our democratic heritage are, however, not entirely convincing. The preamble declares that the constitution of the Dominion is to be "similar in principle to that of the United Kingdom." As can be seen from the above quotation from his judgment, Cannon J., noting that at the time of Confederation the United Kingdom was a democracy, concluded that the British North America Act guaranteed the foundation of democracy, namely, "free public opinion and free discussion throughout the nation of all matters affecting the State within the limits set by the criminal code and the common law." He went on to say that "The federal parliament is the sole authority to curtail, if deemed expedient and in the public interest, the freedom of the press in discussing public affairs and the equal rights in that respect of all citizens throughout the Dominion." There is an antinomy in these two statements. If free public opinion and free discussion are the foundation of democracy, and democracy is protected by the constitution, then neither the provincial legislatures nor the federal parliament should be able to curtail this rightthat is, our constitutional position with respect to freedom of speech and the press would then be analogous to that in the United States.30 28. Supra note 11, at 145-46. 29. Ibid., at 133. 30. The First Amendment to the Constitution of the United States of America

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Duff C.J.C. and Davies J. appear to have recognized the contradiction inasmuch as their judgment makes no reference to the power of Parliament to restrict freedom of discussion but only to its power "to legislate for the protection of this right." 31 It was not necessary in this case to decide whether the federal government had the power to curtail the right. But, it is submitted, the basic premise of the argument regarding the preamble is wrong. Freedom of discussion was not a constitutional fact in the United Kingdom in 1867. Freedom of discussion was a condition which existed in the law at that time, but a condition which was subject to the constitutional fact of supremacy of Parliament. 32 If any conclusion is to be drawn from the statement in the preamble that the Canadian constitution is to be similar in principle to that of the United Kingdom it is that the full range of legislative powers have been distributed by the British North America Act. It follows that Parliament is supreme within its sphere of jurisdiction, and it must also follow that the provincial legislatures are supreme in their spheres of jurisdiction. Therefore, since the United Kingdom Parliament could restrict discussion of public affairs, that power must exist somewhere in Canada.33 In concluding that the provincial legislatures lacked such authority, Cannon J. said that the Press Bill interfered with the free working of provides: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances." By virtue of the Fourteenth Amendment the same guarantee is provided with respect to state law : " . . . No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the law." It has been held that the due process clause precludes the states from legislating in such a way as to deprive a citizen of the United States of any of the liberties set out in the first eight amendments to the constitution. As to the fourteenth amendment and the press see Near v. Minnesota, 283 U.S. 697 (1931). 31. Supra note 11, at 133. Doubts as to whether the federal government has authority to curtail or restrict some of the so-called basic freedoms have been expressed in Saumur v. Quebec and the A.-G. for Quebec, supra note 19, at 329 (per Rand J.), and at 354-56 (per Kellock J.); and in Switzman v. Elbling and the A.-G. for Quebec, [1957] S.C.R. 285, at 328 (per Abbott J.). 32. See A. V. Dicey, The Law of the Constitution, 10th ed. (London: Macmillan, 1959), ch. 6. This section has remained virtually unchanged since the 3rd ed. of 1889. See also chapter 1 on "The Nature of Parliamentary Sovereignty." 33. There is weighty authority for the proposition that the full range of domestic legislative authority was distributed between the provinces and the Dominion by the B.N.A. Act. See in particular A.-G. for Ontario v. A.-G. for Canada, [1912] A.C. 571, at 581 and Saumur v. Quebec and the A.-G. for Quebec, supra note 19, at 324, per Kerwin J.

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the political organization of the Dominion and would have "the tendency to nullify the political rights of the inhabitants of Alberta, as citizens of Canada"-a power which, he said, no province possesses. His conclusion is, of course, correct insofar as debate relative to federal parliamentary institutions, federal elections, and federal issues is concerned. But since the provincial legislatures are also supreme within their own spheres of jurisdiction-supreme to the point that they can amend their own constitutions if they are so minded 34 surely they can lay down rules restricting debate in relation to provincial politics in the same way that the Parliament of the United Kingdom can. The fact that the provincial legislatures may discriminate against particular classes of persons is established by Cunningham v. Tomey Homma, 35 in which the Privy Council held that naturalization did not confer suffrage in provincial elections. This was a privilege which could be extended or withheld at the will of the provincial legislatures. If the provincial legislature can disfranchise a Canadian citizen who would have the franchise federally and in other provinces, it would seem to follow that the legislature could restrict public discussion of political matters falling within provincial jurisdiction and enforce its statutory provisions by the imposition of punishment, by fine, penalty, or imprisonment. 36 This would appear to be the indirect effect of the Press Bill. Section 3, which required the publication of a statement of amplification or rectification, only applied to statements relating "to any policy or activity of the Government of the Province" which had appeared within the next preceding thirty-one days in a newspaper published in Alberta. All the factors involved in s.3 were provincial in nature. On the other hand, s.4, which required the revelation of a newspaper's sources of information, was somewhat more difficult to justify, for, literally, it was not restricted to newspapers published in Alberta or to statements about the policy or activity of the government of Alberta (or matters over which that government had exclusive jurisdiction). If the court read the words "newspaper" and "statement" in s.4 as connoting the same legislative intention as the terms used in s.3, that is, as meaning "newspaper published in the Province" and "statement relating to any policy or activity of the Government of the Province," then there would appear to be no question of the section's validity. 37 Otherwise, s.4 would appear to have been in 34. See s.92(1) of the B.N.A. Act. 35. [1903] A.C. 151. 36. See s.92(15) of the B.N.A. Act. 37. Judges in civil cases can compel a party or witness to disclose the sources

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excess of provincial jurisdiction. However, even if that was the case, s.4 was quite severable from the remainder of the Press Bill, and its excision in no way would have rendered the Bill incomplete or inoperative. The conclusion to be drawn from the above discussion is that the reasoning in the Press Bill case is of doubtful validity. It can at this time perhaps be queried whether certain members of the Court regarded not only the Bill but the Alberta government of the day with extreme distaste, which led them to use emotionally charged terms such as "freedom," "Democracy," and "parliamentary institutions" in place of the colourless language of precedent and reason which normally characterizes judgments of superior courts. Certainly the Alberta government felt that the decision on the three referred bills, and the decision on the Press Bill in particular, had been motivated by policy considerations. For the Alberta government, therefore, it became a matter of political principle that the decision of the Supreme Court with respect to the three bills and the Court's decision (which was handed down the same day), on the federal power of disallowance, should be appealed to the court of last resort-the Judicial Committee of the Privy Council. Actually, counsel for the province of Alberta were of two minds as to the most expedient way of effecting the purpose of the Press Bill. 0 . M. Biggar, K.C., chief counsel for the Attorney-General of Alberta in these cases, recommended that instead of appealing the decision the government give serious consideration to preparing a fresh press bill giving power, for example, to the Attorney-General instead of the chairman of the Social Credit Board, thus making the bill clearly independent of the Social Credit Act. 38 Counsel also submitted that the appeal on the referred bills would be seriously prejudiced in the eyes of the Privy Council if coupled with an appeal against the decision of the Supreme Court on the disallowance question. Cyril Radcliffe, K.C., 39 who was retained by the province of Alberta to argue the cases before the Privy Council, of his information : Wismer v. Maclean-Hunter Publishing Co. Ltd. and Fraser (No . 2), [1954] 1 D.L.R. 501 (B.C.C.A.) ; McConachy v. Times Publishers Ltd. et al. (1964), 49 D.L.R. (2d) 349 (B.C.C.A.). This point has recently been reaffirmed in Great Britain in A-G. v. Mulholland; A.-G. v. Foster, [1963] 2 W.L.R. 658, and A.-G. v. Clough, [1963] 2 W .L.R. 343. The provincial legislatures would appear to have jurisdiction under either s.92(13) (Civil Rights in the Province) or 92(14) (Procedure in Civil Matters) . 38. See supra note 18. 39. Later, Lord Radcliffe.

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felt so strongly on this issue that he refused to present the appeal on disallowance, and urged the provincial government to withdraw the appeal before the hearing because he was convinced "that an attempt to argue this appeal, which has only political considerations to support it will have the most undesirable effect upon the arguments and consideration of the Province's appeal in the other case."40 As a result of Radcliffe's advice, the Alberta government withdrew the appeal on the disallowance question and proceeded only with respect to the three referred bills. Prior to the hearing of the appeal, The Alberta Social Credit Act was repealed. Counsel for the Attorney-General of Alberta therefore argued that the Press Bill could not be held ultra vires on the grounds of its connection with the general legislative scheme of which The Alberta Social Credit Act was the basis, because the latter Act was no longer in existence.41 Much to the surprise of counsel for all parties42 the Judicial Committee itself raised the question whether the appeal on the Credit Regulation Bill and the Press Bill should be heard at all because, in view of the repeal of The Alberta Social Credit Act, neither bill could be made operative without amendment. It was pointed out by their Lordships that it was not the Committee's practice to express an opinion on a matter which was of academic interest only.43 The matter was left at that until the second day of the hearing, at which time their Lordships returned to this point. They asked for an expression of opinion not only from counsel for the Attorney-General of Alberta, but also from Aime Geoffrion, K.C., counsel for the Attorney-General of Canada and J. L. Ralston, .K.C., counsel for the Alberta newspapers. Mr. Geoffrion indicated that he had communicated with Ottawa as to the position he should take if the suggestion made by their Lordships at the previous day's sitting came up again; and acting on instructions he had received he intimated a preference for having the reference with regard to the Press Bill go on. Mr. Ralston, in his turn, also pressed the Committee to have the questions involved finally disposed of. However, after a short adjournment, the Committee 40. Memorandum of Cyril Radcliffe, Lincoln's Inn, June 3, 1938, files of the Attorney-General for Alberta. The reference on the disallowance question is reported in [1938] 5.C.R. 71. 41. Reported in argument, A.-G. for Alberta v. A.-G. for Canada, [1939] A.C. 117, at 121. 42. Letter J. J. Frawley, K.C. (in collaboration with 0 . M. Biggar, K.C.) to the Honourable William Aberhart, Attorney-General for Alberta, July 8, 1938; files of the Attorney-General for Alberta. 43. Ibid.

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announced that in view of the academic character of the question it could hear no argument on the Credit Regulation Bill or the Press Bill. 44 The appeal therefore proceeded only with respect to the Bank Taxation Bill. In view of the express wishes of the parties concerned and the fundamental importance of the issue, it is a pity that the Privy Council could not have relaxed its rules of practice so that a definitive ruling could have been given in this case. Cases of this nature do not often arise, and the result is that we frequently must go for decades in a state of uncertainty about matters basic to our constitution. Freedom of the press, if involved in a case before the court at all, is usually only a collateral issue, and therefore it has failed to receive the serious consideration by the courts which it would otherwise require. The issue has arisen in this way in two cases before the Supreme Court of Canada, Saumur v. Quebec and the A.-G. for Quebec, 45 and Switzman v. Elbling and the A.-G. for Quebec.46 In the former case, the constitutionality of a by-law of the City of Quebec, forbidding the distribution in the streets of the city of "any book, pamphlet, booklet, circular, or tract whatever without having previously obtained for so doing the written permission of the Chief of Police," was challenged by a member of the Jehovah's Witnesses sect. The action was dismissed by the trial judge and by the majority of the Court of Appeal. In the Supreme Court of Canada the appellant (plaintiff) won, five judges finding the by-law to be ultra vires and four finding it to be intra vires. Of the majority, Rand, Kellock, and Locke JJ. approved and applied the statements found in the judgments of Duff C.J.C., and Davies and Cannon JJ, in the Press Bill case that the provincial legislatures could not restrict the discussion of public affairs-Rand and Kellock JJ. reserving the question whether the federal parliament had such power.47 Estey J. made no reference to freedom of speech or the press but based his judgment instead on freedom of religion, which he said was a subject-matter falling outside "civil rights within the province" and within the federal power to pass 44. Ibid. The report of the argument in [1939] A.C. 117 does not indicate either the delay or the fact that counsel for the Attorney-General of Canada and for the Alberta newspapers also wished the matter to be considered and finally disposed of. Neither is the account in The Times of London, July 8, 1938, clear. J. J. Frawley says in his letter to the Honourable Mr. Aberhart that the account of J. L. Ralston's representations were "incompletely set out" in The Times report. 45. [1953] 2 S.C.R. 299. 46. [1957] S.C.R. 285. 47. On the question of the federal government's power to restrict freedom of discussion of public affairs, see supra note 31.

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laws for the "peace, order and good government of Canada."48 Kerwin J., who had also sat on the Press Bill case, expressly disagreed with the sweeping statement of Duff C.J.C., and Davies and Cannon JJ ., and stated that freedom of the press is a civil right in the province. 49 He based his judgment in the Saumur case on a conflict between the by-law and a binding pre-Confederation statute guaranteeing "the exercise and enjoyment of Religious Profession and Worship without discrimination or preference. . . .1150 Of the minority judges, Rinfret C.J.C. and Taschereau J. made no reference to freedom of the press, but they found freedom of religion to be a civil right within the province. 51 Cartwright and Fauteux JJ. found that the by-law was valid as falling within provincial jurisdiction in relation to the use of highways and police regulation to control conditions likely to cause public disorder. They expressed the view that "freedom of the press is not a separate subject matter committed exclusively to either Parliament or the Legislatures," and that "If the subject matter of a Provincial enactment falls within the class of subjects enumerated in s.92 of the British North America Act such enactment does not ... cease to be intra vires of the legislature by reason of the fact that it has the effect of cutting down the freedom of the press."52 They expressly disagreed with the view put forth by Cannon J. in the Press Bill case that the federal parliament by legislation had indicated what publications were criminal and therefore by implication had declared all other publications to be lawful and consequently beyond provincial jurisdiction. 53 In Switzman v. Elbling and the A.-G. for Quebec the Supreme Court of Canada considered the validity of a Quebec statute, An Act Respecting Communistic Propaganda,54 and found it to be ultra vires. Sections 3 and 12 of the Act read: 3. It shall be illegal for any person, who possesses or occupies a house within the Province, to use it or allow any person to make use of it to propagate communism or bolshevism by any means whatsoever. 12. It shall be unlawful to print, to publish in any manner whatsoever or to distribute in the Province any newspaper, periodical, pamphlet, circular, document or writing whatsoever propagating or tending to propagate communism or bolshevism.

Infringement of s.3 could result in the attorney-general ordering that the house be closed, and infringement of s.12 could result in 48. 49. 51. 53.

[1953] 2 S.C.R. 299, at 359.

Ibid., at 324.

[1953] 2 S.C.R. 299, at 318-20. Ibid., at 385-86.

50. (1852), Can. 14 & 15 Viet., c.175. 52. Ibid., at 386. 54. R.S.Q. 1941, c.52.

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imprisonment. Only three of the nine judges relied on the argument that freedom of discussion of public matters was beyond the jurisdictional authority of the provincial government. 65 The other five judges in the majority made no mention of the freedom of the press aspect of the case. 56 It is doubtful therefore whether the case can be cited as holding that provincial legislatures are precluded from restricting public discussion of provincial matters. The judgments in the Supreme Court on the issue of constitutional authority in relation to the press do not provide much comfort for those who like to find certainty in the law. While uncertainty is a great boon to those who rejoice in academic speculation, the issue in this case is far from being purely academic. As was declared by Duff C.J .C., and Davies and Cannon JJ ., the idea of thought-control by the government is abhorrent to us. But we seem to regard with equanimity the possibility of thought-control by the press itself. The famous British publisher, the late Lord Beaverbrook, when asked by the Royal Commission on the Press (1947-1949) what was his main purpose in running his papers, replied: "I run the paper purely for the purpose of making propaganda, and with no other motive." 57 Probably very few Canadian publishers are motivated in the same way as was Lord Beaverbrook-at least they would be unwilling to admit that they are; but whether a story is consciously or unconsciously biased, its effect is the same-the reader does not get a balanced and accurate account. It may be suggested that the reader may counteract the effect of this bias by reference to other sources-but radio and television, because of the evanescent character of such communications, are not an adequate substitute, and in many areas alternative daily newspapers are not available at all. The problem has national implications with the increasing concentration of ownership in the hands of a few large interests and because of the monopoly position of the Canadian Press wire service. The United Kingdom, which was looked to in the Press Bill case as the bastion of freedom and the model for our constitution, has been sufficiently worried about the apparent failure of the press to fulfil its function of keeping the citizenry informed that it has appointed two 55. These judges were Rand, Kellock, and Abbott JJ. 56. The other majority judges were Kerwin C.J.C., Locke, Cartwright, Fauteux, and Nolan JJ. Taschereau J. dissented on the ground that the legislation related to the regulation of property and the suppression of conditions likely to favour the development of crime-Bedard v. Dawson, [1923] S.C.R. 681 followed. 57. Royal Commission on the Press 1947- 1949 Report (London: H.M.5.0 . Cmd. 7700), at 25.

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royal commissions on the press since World War II. The Royal Commission of 1947-1949 concluded that the British press was inferior to none, 58 but found that the popular papers (as distinct from the quality papers) frequently were satisfied with only a rough approximation of the truth59 and generally catered "to the lowest common denominator of taste and interest." 60 In assessing the reasons for the shortcomings of the British press the Royal Commission concluded: "Such of the shortcomings of the Press as are not attributable to excessive bias, competition for higher circulations, or the hazards inherent in collecting the publishing news at high speed, seem to us to be attributable very largely to the inadequate standard of education in the profession of journalism." 61 To overcome these weaknesses the Royal Commission recommended the establishment of a general council of the press, composed of proprietors, editors, other journalists and laymen. The council would be completely independent of the government of the day and would not be a creature of statute, but by the volition of the constituents of the press itself would be given the powers to curb unprofessional conduct on the part of British journalists.62 The council was also to be charged with responsibility for scrutinizing changes in the ownership, control, and growth of press undertakings and giving wide publicity to authoritative information on these matters.63 The report of the Royal Commission was not enthusiastically received by the press, and it was over four years before the General Council of the Press was established-even then, all lay representation was excluded from the Council. The Council had indifferent success in its attempts to upgrade the British press, and was almost completely inactive in the economic field.64 In the period 1948-1961 the three leading newspaper chains in Britain increased their percentage of circulation of daily newspapers from 45 to 67 per cent.65 The second Royal Commission on the Press, which reported in 1962, found that concentration of ownership carried with it the potential danger that variety of opinion might be stifled. To prevent this from occurring, the Royal Commission recommended that the press be given a time limit within which to reconstitute the General Council of the Press in accordance with the recommendations of the first Royal Commission, 58. Ib id., at 149. 59. Ibid., at 150. 60. Ibid., at 152. 61. Ibid., at 153. 62. Ibid., at ch. 17. 63. Ibid., at 174. 64. Royal Commission on the Press 1961-1962 Report (London : H.M.S.O. Cmd. 1811), at 101. 65. Ibid., at 15.

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and to invest it with the necessary authority and financial capacity to carry out its objectives to the fullest degree. If the press failed to comply with this request, the Royal Commission said that the case for a statutory body with definite powers and the right to levy the industry was a clear one. 66 In addition, the second Royal Commission recommended the introduction of legislation designed to prevent mergers of press enterprises which in the opinion of a special press amalgamations tribunal were contrary to the public interest.67 Pursuant to the recommendations of the second Royal Commission, the General Council of the Press was reconstituted voluntarily by the press so as to include lay representation, 68 and the government passed the Monopolies and Mergers Act, 1965.69 Section 8 of that Act declares unlawful and void any transfer of a newspaper or of newspaper assets to a newspaper proprietor whose newspapers have an average circulation per day of publication amounting, with that of the newspaper concerned, to five hundred thousand or more copies, unless the transfer is made with the written consent of the Board of Trade given after the Board has received a report from the Monopolies Commission.70 The Commission shall report to the Board whether or not the transfer may be expected to operate against the public interest, taking into account all matters which appear in the particular circumstances to be relevant and having regard (amongst other things) to the need for accurate presentation of news and free expression of opinion. 71 CONCLUSION

The primary submission of this paper is that the Press Bill case cannot be relied upon as authority for any rule relating to jurisdiction over the press. While it would be practically convenient for the federal government to have exclusive jurisdiction over the press because of 66. Ibid., at 102. 67. Ibid., at 105-11. 68. The new constitution was adopted July 1, 1963, and the first meeting of the new Council, complete with lay representatives, took place January 14, 1964. Under the new constitution the Council's name was changed from "The General Council of the Press" to "The Press Council." The first lay chairman of the Press Council was the well-known law lord, Lord Devlin. See The Press and the People -the annual report of the Press Council, particularly the 10th and 11th annual reports covering the years 1962-1964. 69. 13 Eliz. II (1965), c.50. 70. Ibid., s.8(1). 11. Ibid., s.8(3).

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the national nature of some publications and the boundless nature of news itself, it cannot be stated with any degree of confidence that the constitution so provides. It seems more likely that the jurisdiction over the press is divided between the federal and provincial governments. To those who suggest that there is nothing to worry about, the British experience may be cited as evidence that the press is either unable or unwilling to rectify its own shortcomings without some form of governmental regulation. Perhaps it is time that Canadians re-examined their century-old cliches about freedom of the press, with emphasis not on freedom of the press itself but on the goal to which that freedom is directed-an enlightened public. The task of the legislator and the lawyer alike is to consider what measures will best facilitate the attainment of this goal within the framework of the Canadian constitution.

B. L. STRAYER

Crown Immunity and the Power of Judicial Review

THE POWER of Canadian courts to review legislation for constitutional validity has long been taken for granted. The general desirability and acceptability of judicial review have been confused with its inevitability. It is assumed that there is some form of constitutional guarantee that the courts will in any and all circumstances be able to pass judgment on the validity of the work of Parliament or the provincial legislatures. Such a guarantee is attributed to our constitution by many, on the assumption that this is an inevitable feature of a federal state. Concepts of federalism in Canada as elsewhere have been profoundly influenced by developments in the United States. There, ever since Chief Justice Marshall's judgment in Marbury v. Madison,1 the right of judicial review has not been seriously challenged. But it must be recognized that judicial review is not an inevitable feature of federalism. Switzerland, for example, does not permit judicial review of legislation passed by its Federal Assembly. And analogies with other federal constitutions are not always sound. There are, for example, distinct provisions in the American constitution which would justify Marbury v. Madison but which have no exact counterpart in the British North America Act. The Canadian constitution does not guarantee the existence of a supreme court in which is to be vested a "judicial power" which "shall extend to all cases in law and equity, arising under this constitution."2 Others would base the right of judicial review on the text of the British North America Act itself. They argue that the references to "superior courts" in Part VII (ss.96 to 101) of that Act imply a

1. 1 Cranch 137, 5 U.S. 87 (1803) .

2. See Constitution of the United States, Article III.

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guaranteed jurisdiction for those tribunals which would include the power of judicial review. Thus it is argued that no Canadian superior court, whether federally or provincially created, can be prevented from considering the constitutional validity of legislation.3 To the extent that this argument proceeds on the basis that the reference to "superior courts" was intended to guarantee courts similar to those existing in England in 1867, it is weakened by the fact that English superior courts had no power to review the validity of acts of Parliament. In addition, there are other provisions in the British North America Act which seriously detract from any supposed guarantee of judicial supremacy. First the power to create courts, and to regulate their "constitution, maintenance, and organization," was expressly conferred on the provincial legislatures and the Parliament of Canada. 4 This would seem to permit the respective legislative bodies the widest discretion in the conferral or denial of jurisdiction with respect to the courts of their creation. Secondly, the B.N.A. Act in its preamble expresses the intention of conferring a "constitution similar in principle to that of the United Kingdom." Among the constitutional principles of the United Kingdom were those of parliamentary sovereignty-including the supremacy of Parliament over the courts-and Crown immunity from suit in the courts. Because of these provisions in the B.N.A. Act it is impossible to assert a universal right of judicial review. Instead it has been necessary to consider in particular situations whether judicial review has been validly limited or barred by countervailing constitutional principles or the exercise of a clearly conferred legislative power. One of the most interesting developments in this regard has arisen out of the conflict between the desire for judicial review of legislation on the one hand and the long-standing Anglo-Canadian concept of the immunity of the Crown from suit. Here we have both common-law rules pertaining to the Crown prerogative and statutory modifications of those rules. The common law and most of the statutory rules developed in a unitary state. This is typical of the public law which Canada inherited and has had to apply within the framework of a 3. See e.g., Ottawa Valley Power Company et al v. Hydro-Electric Power Commission et al, [1937] O.R. 297, at 333, [1936] 4 D.L.R. 594, at 603-4 (Ont. C.A.) ; 1.0.F. v. Lethbridge Northern Irrigation Dist., [1938] 2 W.W.R. 194, at 211, [1938] 3 D.L.R. 89, at 102-3 (Alta. Sup. Ct., App. Div.); Lederman, "The Independence of the Judiciary" (1956), 34 Can. Bar Rev. 769 (Part I), 1139 (Part II), at 1160, 1175. 4. British North America Act, ss. 92(14), 101.

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federal state. We must therefore see the extent and manner of modification of Crown immunity in Canada, and its relationship to the needs of Canadian federalism. GENERAL PRINCIPLES OF CROWN IMMUNITY

At common law the citizen had no right to sue the Crown. In spite of a steady development away from this position in favour of Crown liability, problems still arise when action is brought against the Crown or its representatives. In a federal state such as Canada, with a written constitution limiting legislative and executive powers, these problems take on a special significance where the complaint against the Crown is that it acts or has acted pursuant to an invalid statute. In such circumstances the question arises of the extent to which traditional Crown immunity can prevent the courts from entertaining an action to determine the validity of legislation. In England the Crown was immune from suit because the central courts were the king's courts, and no feudal lord was subject to the jurisdiction of his own courts. From about 1300 onwards, the petition of right was available to permit many actions. By this procedure a claim was submitted to the king and if he in his unfettered discretion saw fit he could by his fiat refer it to the courts for adjudication in the normal way. This procedure was regularized and simplified by statute in 1860.5 It was never available, however, for actions in tort, at least those which were not real actions. Tort actions were denied because the Crown was not considered capable of committing a tort"the king can do no wrong." Petition of right was thus used mainly in actions for the recovery of property in the hands of the Crown or for the enforcement of contracts. Where no such relief was sought it was not available.6 In Canada the same rules applied to proceedings against the Crown both federally and provincially. The Dominion and some of the provinces had their own legislation pertaining to petition of right, while other provinces apparently left unaltered the uncertainties of the common law which had obtained in England prior to 1860. 7 The 5. Petition of Right Act, 23 & 24 Viet. (1860), c.34. 6. See Holdsworth, "The History of Remedies Against the Crown," (1922), 38 L.Q.R. 141 ; Morgan, Introductory Chapter in Robinson, Public Authorities and Legal Liability (1925), xviii-liii ; Street, Governmental Liability (1953), 1-6. 7. For a survey of Canadian law prior to recent statutory modification see "The Crown as Litigant : Report of Committee on Comparative Provincial Legislation and Law Reform, 1936" (1936), 14 Can. Bar Rev. 606.

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Dominion did, at an early stage, extend the scope of petition of right by permitting actions for tort in some cases. 8 But it was clear in Canada that the Crown's representative-either the governor general or the lieutenant-governors-had an unlimited discretion in this matter. A refusal to grant a fiat could not be questioned in the courts, even where the proceedings were to be used to test the validity of legislation. 9 If an action could be framed so that the Crown was not a necessary party, the problem of Crown immunity did not arise. But wherever Crown title or interest in property would be affected, the Crown had to be made a party, 10 by petition of right procedure where such rights were directly affected.11 Even in its most extended application the principle of Crown immunity was only a limited obstacle to constitutional litigation. If the action were framed so as to constitute a claim for damages against a person or company acting under an invalid statute, this was permissible without petition of right so long as Crown property interests were not directly attacked. One could always maintain an action against a fellow subject of the Crown under such circumstances.12 A public officer could be sued for damages for unauthorized acts committed by him, 13 or could be restrained by injunction from committing such acts. 14 In none of these cases was petition of right required to question the validity of the authority under which the person, officer, or agency had acted or intended to act. The Crown's representative could apparently be sued without petition of right by means of an action for a declaratory judgment where Crown rights were not directly involved. The leading modern English case on this point is Dyson v. Attorney-General15 decided in 1911. The plaintiff had received a notice (some eight million such notices had been sent out) from the Commissioners of Inland Revenue 8. See Exchequer Court Act, R.5.C. 1952, c.98, s.18 and its predecessors. See also infra note 36 and accompanying text. 9. Orpen v. A.-G. for Ont., [1925] 2 D.L.R. 366 (Ont. High Ct.), aff'd., [1925] 3 D .L.R. 301 (Ont. Sup. Ct., App. Div.); Lovibond v. Governor General of Canada, [1930] A.C. 717 (P.C). 10. Esquimalt & Nana imo Ry. v. Wilson, [1920] A.C. 358 at 369 (P.C.). 11. A .-G. for Ont. v. McLean Gold Mines Ltd., [1927] A.C. 185 (P.C.); Lovibond v. Grand Trunk Ry., [1936] 2 W.W.R. 298, [1936) 3 D .L.R. 449 (P.C.) ; Contact Mining & Development Co. Ltd. v. Craigmont Mines Ltd. 35 W.W.R. (n.s.) 480, 29 D.L.R. (2nd) 592 (Sup. Ct. of Can. 1961), affirming without written reasons 35 W.W.R. (n.s.) 214, 26 D .L.R. (2nd) 35 (B.C. C.A. 1960). 12. Lovibond v. Grand Trunk Ry., 2 W .W.R., at 311-12, 3 D .L.R., at 460-61. 13. Musgrove v. Pulido (1879), 5 App. Cas. 102 (P.C.) ; Roncarelli v. Duplessis, [1959) S.C.R. 121, 16 D .L.R. (2nd) 689. 14. See Strayer, "Injunctions Against Crown Officers" (1964), 42 Can. Bar

Rev. 1.

15. [1911) K.B. 410.

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requiring him to make certain returns with respect to his property. Failure to deliver the returns would make him liable to a penalty recoverable at the suit of the Attorney-General. The plaintiff commenced action for a declaration that the notice and other requirements were not in accordance with the statute and were ultra vires of the Commissioners. The Attorney-General moved to strike out this pleading on the grounds that such action could be maintained only by petition of right because the rights of the Crown would be directly affected. The Court of Appeal held that the action would lie and that a petition of right was not necessary. The Dyson decision is far from clear on the question of whether petition of right would be required where the Crown's rights were directly affected. Cozens-Hardy M.R. seems to treat it as a case directly affecting Crown rights but cites authority from the Court of Exchequer to show that declaration could be made in such circumstances.16 Farwell L.J. appears to hold that Crown rights were only indirectly affected, and for that reason the action would be maintainable.17 Fletcher Moulton L.J. objected to the point being dealt with on a motion to strike out pleadings and simply held that it should be left for decision at the trial. It would appear, however, that Crown rights if affected at all in this action would be affected very indirectly. No existing property of the Crown was involved. At most, the decision could only affect possible future revenues. The issue of the ultimate liability of the plaintiff to pay taxes was not raised, though the decision could have an adverse effect on the right of the Crown to enforce the penalty. One of the counsel in the case, later elevated to the bench, interpreted the Dyson action as one which affected Crown rights only indirectly. 18 The Privy Council similarly regarded the decision,19 and it refused to allow declaratory actions which would directly affect Crown rights in the absence of petition of right. 20 This is consistent with the traditional principles of Crown immunity which would prohibit a court from depriving the Crown of its property. The modern constitutional justification for this is more clearly attributable to parliamentary supremacy. If the 16. Ibid., at 415-17. For a criticism of this reliance on Exchequer decisions see Street, supra note 6, at 132-34. The arguments there stated are probably not relevant in many Canadian jurisdictions where the superior courts were given the same jurisdiction as all of the royal courts in England had enjoyed. 17. Ibid., at 421-22. 18. Rowlatt J. in Bombay & Persia Steam Navigation Co. v. Maclay, [1920) 3 K.B. 402, at 408. 19. A.-G. for Ont. v. McLean Gold Mines Ltd., supra note 11, at 191. See also Esquimalt & Nanaimo Ry. v. Wilson, supra note 10. 20. McLean case, ibid.; Lovibond v. Grand Trunk Ry., supra note 11.

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court could, without consent of the legislature, order the payment of public funds or the transfer of Crown property, then the legislature's primary jurisdiction over these matters would be denied. But where the court order in the form of a declaratory judgment would not involve interference with public property, the court may proceed without infringing on Crown or legislature. The declaratory action without petition of right had particular significance in a federal system such as Canada's. It provided a means for raising constitutional issues in situations where it was not necessary to attack Crown title to property or seek recovery of money from the Crown. As in England, legislation in most Canadian jurisdictions permits the grant of a declaration though no other relief is sought. 21 The constitutional validity of governmental action could thus be attacked without government consent. It has in fact been held that the declaration is the proper method of attacking legislative validity where crown rights are not directly involved,22 and that petition of right is not an appropriate procedure in such cases. 23 STATUTORY MODIFICATIONS

The foregoing common-law rules with respect to crown immunity from suit have now undergone changes through both legislative and judicial action. Important legislative reform came in England with the passage of the Crown Proceedings Act, 1947. 24 Section 1 of that Act provided that, in all cases where a person had a claim against the Crown which previously would have been enforceable only by petition of right, the claim could now be enforced as of right and without fiat. Section 21 provided that the Court could make such orders against a subject, except that instead of making an order for delivery of property by the Crown the court was confined to making a declaratory order. 25 21. See e.g., R.S.M. 1954, c.52, s.62(8); R.S.O. 1960, c.197, s.15(2); R.S.S. 1965, c.73, s.45(17). For a history of this aspect of the declaratory action see Zamir, The Declaratory Judgment (1962), 7-17. 22. Esquimalt & Nanaimo Ry. v. Wilson, supra note 10, at 364. 23. Canadian Pacific Ry. v. A.-G. for Sask. 1 W.W.R. (n.s.) 193, [1951] 3 D.L.R. 362 (Sask. K.B. 1951); appealed 2 W.W.R. (n.s.) 424, [1951] 4 D.L.R. 21 (Sask. C.A.), [1952] 2 S.C.R. 231, [1952] 4 D.L.R. 11, without reference to this point. See also Tiny Separate School Trustees v. The King, [1927] S.C.R. 637, at 706-7, 713, [1927] 4 D.L.R. 857, at 906, 911. 24. 10 & 11 Geo. VI, c.44. 25. For details of practice with respect to declaratory actions under the Act see Zamir, supra note 21, at 289-97.

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In Canada the use of declaratory judgments against a representative of the Crown was facilitated by statute in some jurisdictions many years ago. Typical of these statutory provisions is s.32 of the Judicature Act of Alberta26 which confers jurisdiction on the Supreme Court of the province as follows : (I) the Court has jurisdiction to entertain an action at the instance of either (i) the Attorney General for Canada, or (ii) the Attorney General of the Province for a declaration as to the validity of a statute or a provision in a statute of the Legislature of the Province though no further relief is prayed or sought; (m) an action under clause (1) for a declaration as to the validity of a statute or a provision thereof shall be deemed sufficiently constituted if the two Attorney Generals [sic] are parties thereto, and a judgment in such action may be appealed against as other judgments of the Court. ...

This procedure was provided in Ontario as early as 1886 and is now also found in Manitoba, British Columbia, and New Brunswick.27 The Ontario provision,28 though cast somewhat differently, seems to be similar in effect, except that it provides in addition that the validity of federal legislation may also be questioned in this manner. Where such provisions are in force it would seem that no problem of Crown immunity would arise in the grant of a declaratory judgment against the attorney-general of the province. Whereas by the common law no such judgment could be given without petition of right if the Crown's rights were directly affected, by this statutory innovation the attorneygeneral is made subject to suit regardless of the effect on Crown rights. The effect of such procedure, while no doubt beneficial in situations where it applies, 29 is nonetheless very limited. It is of no use to private litigants because the action must be instituted by an attorney-general-almost certainly the attorney-general of Canada who would probably be most reluctant to institute such proceedings. It is useful only as against provincial legislation, except in Ontario. It is not available in many provinces, and not at all in the federal courts except through appeal to the Supreme Court of Canada. More significant in Canada have been the general statutory modifications of Crown immunity which have facilitated private actionsincluding those challenging legislative validity-against the Crown. 26. 27. c.120, 28. 29.

R.S.A. 1955, c.164. R.S.M. 1954, c.52, ss.61, 62(8); R.S.B.C. 1960, c.72, s.11; R.S.N.B. 1952, s.24. R.S.O. 1960, c.197, s.20. See Grant, "Judicial Review in Canada : Procedural Aspects" (1964), 42 Can. Bar Rev. 195, at 202-3.

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There had been discussion in Canada for years as to the need for reform of the Crown prerogative of immunity from suit.30 Passage of the Crown Proceedings Act in England gave the necessary impetus to action, and in 1948 the Conference of Commissioners on Uniformity of Legislation in Canada undertook a study of the problem. In 1950 a model act 31 was adopted, patterned very closely after the English Act. This statute has been adopted in almost identical terms in Alberta, Manitoba, New Brunswick, Nova Scotia, Ontario, and Saskatchewan. 32 Section 4 of the Uniform Act, similar to s.1 of the English Act, provides: 4. Subject to this Act, a claim against the Crown, that, if this Act had not been passed, might be enforced by petition of right, subject to the grant of a fiat by the Lieutenant Governor, may be enforced as of right by proceedings against the Crown in accordance with this Act, without the grant of a fiat by the Lieutenant Governor. Section 5(1) abolishes the rule that "the king can do no wrong" by making the Crown liable as an ordinary person would be in tort, including vicarious liability for torts of Crown servants, liability of a master to his servants, liability "in respect of any breach of the duties attaching to the ownership, occupation, possession or control of property ..." and liability imposed by or under any statute. Section 5(3) makes clear that the Crown will be liable even if the Crown servant has acted in an unauthorized fashion while carrying out the duties assigned to him. (3) Where a function is conferred or imposed upon an officer of the Crown, as such, either by any rule of the common law or by statute, and that officer commits a tort in the course of performing or purporting to perform that function, the liability of the Crown in respect of the tort is such as it would have been if that function had been conferred or imposed solely by virtue of instructions lawfully given by the Crown.

Subject to certain limitations stated therein, sections 4 and 5 of the Uniform Act eliminate Crown immunity from suit. Where action could previously be initiated only by petition of right-that is, where Crown property was directly involved-no petition is now required. Where 30. See e.g. Kennedy, "Suits By and Against the Crown" (1928), 6 Can. Bar Rev. 329; Report, supra note 7. 31. [1950) Proceedings of Conference of Commissioners on Uniformity of Legislation in Canada (hereinafter cited as Uniform Act), 76. 32. S.A. 1959, c.63; R.S.M. 1954, c.207; R.S.N.B. 1952, c.176; R.S.N.5. 1954, c.225; 5.0. 1962-63, c.109, replacing 5.0. 1952, c.78 which was never proclaimed; R.5.5. 1965, c.87.

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the Crown could not be sued at all-for liability in tort-it can now be sued in an ordinary action. These changes effected by the Uniform Act are of considerable importance for constitutional litigation. A citizen wishing to sue the Crown for recovery of property or for damages in tort may well allege that Crown title is defective because it is based on an ultra vires statute, or that acts by Crown officers causing damage to him were committed under invalid legislation. Courts have sometimes been precluded in such cases from dealing with the constitutional point because of the immunity of the Crown from the action itself. No such situation need now arise in the provinces which have adopted the Uniform Act. The Act does in certain cases limit particular remedies against the Crown. No injunction may be given against the Crown (s.16[2]) or an officer of the Crown (s.16[4]) nor may an order for the recovery of land or the delivery of property be made against the Crown or its officers. 33 In each case, however, the court is permitted in lieu of such orders to make a declaratory order as to respective rights. Rights, including constitutional rights, may thus be adjudicated although certain remedies are excluded. Quebec has recently achieved a similar result by an amendment 34 to the Code of Civil Procedure. Article 94, as amended, provides that: any person having a claim to exercise against the Crown, whether it be a revendication of moveable or immoveable property, or a claim for the payment of moneys on an alleged contract, or for damages, or otherwise, may exercise it in the same manner as if it were a claim against a person of full age and capacity, subject only to the provisions of this chapter.

Article 94b provides that "no extraordinary recourse or provisional remedy lies against the Crown" and Article 94j makes execution procedures inapplicable to the Crown. At the federal level the immunity of the Crown in right of Canada has been similarly reduced. The first Petition of Right Act of the Dominion, passed in 1875, in effect adopted the same rules as those obtaining in England under the Petition of Right Act of 1860 and the common law. 35 Twelve years later a modification of those rules began in Canada with the passage of an amendment to the Supreme and Exchequer Courts Act giving the Exchequer Court jurisdiction in 33. 5.16(3) and (4): see s.21 of the Crown Proceedings Act, 1947, supra note 24, for comparable provisions in England. 34. S.Q. 1966, c.21, s.5. 35. S.C. 1875, c.12. See Queen v. Mcfarlane (1882), 7 S.C.R. 216; Queen v. McLeod (1882), 8 S.C.R. 1.

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certain tort actions against the Crown. While the jurisdiction was at first quite limited-applying only in cases of claims arising out of "death or injury to the person or to property on any public work ... " resulting from the negligence of a Crown officer or servant acting within the scope of his employment-it did represent the first exception in the Empire to the rule that "the king can do no wrong." This jurisdiction was gradually widened 36 so that after 1938 the court had jurisdiction over claims arising out of such death or injury whether or not it occurred in connection with a "public work." 37 It had been necessary, of course, to use petition of right procedure for such tort actions as well as for most other actions against the Crown and to obtain the fiat of the governor general consenting to the action. The governor general had an unfettered discretion to refuse his fiat. 38 This obstacle was eliminated in 1951 by an amendment 39 to the Petition of Right Act abolishing the requirement of the governor general's fiat, with respect either to a claim or counter-claim against the Crown. 40 While the action is still initiated by a petition of right, the petition need not be submitted to the governor general for approval. Shortly after the elimination of the procedural need for consent, the substantive liability of the Crown federal was enlarged by the enactment of the Crown Liability Act 41 in 1953. The most important provision therein is s.3 which provides in part: 3. (1) The Crown is liable in tort for the damages for which, if it were a private person of full age and capacity, it would be liable (a) in respect of a tort committed by a servant of the Crown, or (b) in respect of a breach of duty attaching to the ownership, occupation, possession or control of property.

Clause (b) of sub-section (1) probably does not, as a practical matter, greatly extend the liability of the Crown which was previously enforceable by petition of right, as vicarious liability would frequently arise in connection with property under the previous law. Clause (a), however, substantially extends Crown liability in tort. The latter had previously been confined by the Exchequer Court Act 42 to a "claim against the Crown arising out of any death or injury to the person or to property resulting from the negligence of any officer or servant of the Crown while acting within the scope of his duties or employment." 36. 38. 40. 41.

S.C. 1917, c.23, s.2; 1938, c.28, s.1. 37. R.5.C. 1952, c.98, s.18(1)(c). Lovibond case, supra note 9. 39. S.C. 1951, c.33, s.1. Queen v. Pfinder, [1959) Ex. C.R. 31. S.C. 1952-53, c.30. 42. Supra note 37.

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The 1953 Act for the first time made the Crown in right of Canada generally liable in tort. Liability was no longer confined to acts of "negligence" of its servants. 43 The Act also enabled a claimant to sue in the provincial courts in tort where small amounts are involved. 44 The net effect of these developments is that the Crown in right of Canada now enjoys practically no immunity from suit. It would therefore not be possible for the government of Canada to avoid, as it has on at least one occasion45 in the past, the judicial review of Parliament's legislation through a refusal to grant a fiat. The citizen now can, without obstruction, sue the Crown in tort, contract, or for the enforcement of property rights and in the process challenge the validity of legislation under which the Crown acts or intends to act. JUDICIAL MODIFICATION

While Crown immunity has thus been denied by statute within the federal jurisdiction and seven provincial jurisdictions, the commonlaw position remains relevant for three of the provinces. 46 It is possible that the law has been developed sufficiently by the courts, however, so that Crown immunity is no longer a substantial obstacle to judicial review of legislation in these jurisdictions even in the absence of legislative reform. A comparison of two leading Canadian authorities will indicate the extent of this judicial development. In the first of these cases, Lovibond v. Grand Trunk Ry.,41 the Judicial Committee of the Privy Council in 1936 held Crown immunity to be an obstacle to claims based on the alleged invalidity of federal statutes. By means of various federal statutes and orders in council passed thereunder, the Minister of Finance had become owner in trust for the Crown of certain stock in the Grand Trunk Railway. This stock had been taken compulsorily from its former holders in 1923 and the Grand Trunk had been merged with another line to form the new Canadian National Railway. In 1929 the plaintiff, Lovibond, who as a stockholder had been deprived of his stock in this manner, presented a petition of right to seek a declaration that the stock was still legally vested in the previous holders on the 43. For the significance of the earlier limitation see Magda v. The Queen, [1964] 5.C.R. 72, at 76-78, 42 D.L.R. (2nd) 330, at 334-35. 44. Supra note 41, ss. 8-14. 45. See Lovibond case, supra note 9 and note 11. 46. British Columbia, Newfoundland, and Prince Edward Island. 47. Supra note 11.

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grounds that the various acts of parliament and orders in council were ultra vires. The Governor General's fiat was refused and the Privy Council refused to review the Governor General's decision. 48 Lovibond then obtained transfers of certain Grand Trunk shares from some of the previous stockholders and sought to be registered as the new holder. The Grand Trunk and Canadian National officers refused to so register him. He then commenced action against the Grand Trunk, the Canadian National, and the Attorney-General of Canada seeking three types of relief: (1) declarations that the various statutes, together with the orders in council and agreements made thereunder, were ultra vires the Parliament and government of Canada; (2) other declarations that his old stock had not been validly transferred to the minister and an order against the railways requiring them to rectify the stock register of the Grand Trunk so as to show him as owner of this stock and of the new stock recently transferred to him; (3) damages against the railways, as an alternative remedy, for failure to restore his name as stockholder or to register him as owner of the stock newly transferred to him. The Privy Council held that the relief described in item 2 could not be had without petition of right. 49 The effect of such declarations and orders would be to take stock away from the Minister of Finance who was trustee for the Crown. The Crown would thus be deprived of its beneficial interest in property and this could only be done by petition of right. With respect to the declarations described in item 1, it was held that these were: "sought as foundations upon which to base the claims to have the names of the old holders of the junior stocks restored as such to the register of the Grand Trunk: in other words they are ancillary to the claims which can only be the subject of a petition of right. The action cannot be allowed to proceed in regard to them." 50 As the Attorney-General was sued only with respect to these declarations it was held that he was no longer a party. The Privy Council did find, however, that the action for damages described in 3 could proceed without petition of right. This claim was against the railway companies, not the Crown. Lord Russell of Killowen said that it could proceed because the relief sought would not involve the Crown as a party nor would the Crown be deprived of its interest in property by an award of damages against the railway companies. It was immaterial that the basis for claiming damages 48. Lovibond v. Governor General of Canada, supra note 9. 49. [1936] 2 W .W .R. 298, at 310--11, [1936] 3 D.L.R. 449, at 459-60. 50. [1936] 2 W.W.R., at 312, [1936] 3 D.L.R., at 461.

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might be the alleged invalidity of various statutes and orders in council. 51 This decision made Crown immunity from suit a formidable obstacle to judicial supervision of constitutional limitations. From his earlier experience it was clear to the plaintiff that a fiat would probably not be granted to him in petition of right procedure. He was thus effectively barred from asserting against the Crown, the new beneficial owner of his property, a claim to that property based on the unconstitutionality of the Crown's title. While, in this case, he might have obtained some relief through the recovery of damages from the railway companies, one can imagine situations in which there might not be any such convenient defendants against which the constitutional claim could be urged. If, for example, the Crown had, under similar legislation, seized real property from him directly without intervention or assistance of other agencies, he might well be barred from all action. Even in the circumstances of the Lovibond case, of course, the plaintiff could never recover his property no matter how invalid the Crown title. He would have to settle for damages instead. The Lovibond case was criticized at the time by Mr. F. A. Brewin, writing in the Canadian Bar Review.52 He suggested that the principles of Crown immunity should be modified in a federal state where both legislative and executive powers are limited by the constitution. In his view the Crown prerogative to refuse to permit actions involving Crown title to property ought not to extend to cases where that title was being attacked on constitutional grounds. The Lovibond decision was, however, followed in Canada in a constitutional dispute113 and has never been expressly repudiated by any Canadian court. Before leaving the Lovibond case it is interesting to note that the trial judge whose decision54 the Privy Council affirmed in part was Mr. Justice Kerwin of the Ontario High Court. He had held that no part of the action-not even the claims for damages against the railways-could proceed without petition of right. The Privy Council agreed in part but felt that he had defined Crown immunity too broadly. Mr. Justice Kerwin was appointed in 1935 to the Supreme 51. [1936] 2 W.W.R., at 311-12, [1936] 3 D.L.R., at 460-61. The damage action subsequently failed on substantive grounds, [1939] O.R. 305, 2 D.L.R. 562 (Ont. High Ct.). 52. "Comment" (1936), 14 Can. Bar Rev. 621. 53. Royal Trust Co. v. A.-G. for Alta., [1936] 2 W .W.R. 337, [1937] 3 D.L.R. 365 (Alta. Sup. Ct.). 54. [1933) O.R. 741, [1933) 1 D.L.R. 798 (Ont. H.C).

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Court of Canada and was an important figure in the other leading case on this subject now to be discussed. In British Columbia Power Corporation v. British Columbia Electric Company 55 the Supreme Court of Canada was faced with a similar problem with respect to the effect of Crown immunity on actions challenging constitutional validity of legislation. B.C. Electric was a provincially incorporated company the shares of which were wholly owned by B.C. Power, a federally incorporated company. The British Columbia legislature passed the Power Development Act, 1961,56 which purported to vest all of the shares of B.C. Electric in the Crown in right of the province. The company was also declared to be an agent of the Crown. Compensation was fixed in a manner unsatisfactory to B.C. Power. The latter attempted to commence action against the Crown in September 1961, by petition of right to claim additional compensation. A fiat was refused. In November 1961, B.C. Power commenced an action without petition of right against B.C. Electric, the Attorney-General of British Columbia, and others. As later amended, the claim of the plaintiff sought, inter alia, various declarations as to the invalidity of the Power Development Act. The legislation was attacked on the grounds that it "sterilized" a federally incorporated company, that B.C. Electric was an undertaking connecting the province with other provinces and with the United States and thus beyond provincial jurisdiction, that there was a denial of "due process of law," and that it would frustrate the Columbia River Treaty, a matter of federal concern. At the end of March 1962, the legislature passed two further acts with respect to the B.C. Electric takeover. The Power Development Act, 1961, was amended 57 to increase the compensation for B.C. Electric shares, which compensation was not to be open to question in any court. Section 5 of the amending Act provided that the meaning or effect of the Act as amended should not be reviewable by a court except through petition of right proceedings. The other statute enacted at this time was the British Columbia Hydro and Power Authority Act, 1962.58 It created the Authority by merger of the B.C. Electric and the British Columbia Power Commission. The new Authority was made the owner of all the assets of B.C. Electric and was declared to be an agent of the Crown in right of the province. Meanwhile, in interlocutory proceedings in its action, the plaintiff 55. (1962] S.C.R. 642, 34 D.L.R. (2nd) 196. 56. 5.8.C. 1961, second sess., c.4. 57. 5.8.C. 1962, c.50. 58. 5.8.C. 1962, c.8.

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B.C. Power Corporation applied for and obtained an order appointing a receiver and manager of the undertaking, property, and interests of the B.C. Electric Company pending the trial of the action. This order was appealed and set aside by the Court of Appeal. B.C. Power appealed the latter decision and in this manner brought the case before the Supreme Court of Canada. While the Attorney-General of British Columbia did not contend that a court could not review the validity of these acts in some proceeding, he took the position that a receivership order could not be made pending determination of the constitutional issue. It was argued that such an order would directly affect the estate of the Crown. If the Court appointed a receiver of the assets, the Crown would be barred from exercising its rights as sole shareholder to bring about a merger of these assets into the new Hydro Authority. The Power Development Act had also made B.C. Electric an agent of the Crown, and it was contended that B.C. Electric's assets were those of the Crown held by its agent. Thus no such order could be made except through petition of right procedure. 59 The respondent Hydro and Power Authority took much the same position, citing inter alia the Dyson and Lovibond cases. 60 The appellant B.C. Power put forward four main arguments on this aspect of the jurisdiction of the Court to make the order appointing a receiver. First, it was asserted that whatever the position of the Crown prerogative of immunity from suit might be in England, the prerogative was necessarily limited in Canada. The Privy Council decision of Bonanza Creek Gold Mining Company v. The King 61 was cited, wherein it was held that the Crown prerogative had by implication been divided among the dominion and provincial executives in a manner correlative to the distribution of legislative powers. 62 Secondly, on the assumption that the court had jurisdiction to decide as to the constitutional validity of the statutes in question, the order appointing a receiver was said to be necessarily incidental to that jurisdiction. It was suggested that otherwise a declaration of invalidity could "be meaningless if in the meantime the Legislature has been able to achieve by indirect means its illegal object."63 An analogy was drawn with cases where an interim injunction had been granted against Crown officers pending trial of a constitutional dispute. Thirdly, it 59. Factum of the Attorney-General of B.C., at 3-5. 60. Factum of the B.C. Hydro and Power Authority, at 6-7. 61. [1916] 1 A.C. 566, at 579-80, 586-87 (P.C.). 62. Appellant's factum, at 10. 63. Ibid., at 11.

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was argued that the order would not directly affect the rights of the Crown and therefore, on an analogy with the Dyson case, the Court could make such an order without petition of right. It was contended that the only right of the Crown here was the right to appoint directors of B.C. Electric, which right was not interfered with even though effective power of the directors might be curtailed by the appointment of a receiver. 64 Fourthly, and in the alternative, it was urged that even if the order would directly affect the rights of the Crown, these were rights arising under a statute the validity of which was under attack. Further reference was made to the limited nature of the crown prerogative in a federal state as interpreted by the Bonanza case, and to cases where interim injunctions had been issued against Crown officers pending the trial of actions involving constitutional issues. 65 Chief Justice Kerwin, on behalf of the majority, disposed of these detailed and substantial arguments in summary fashion. After referring very briefly to the contentions of the Attorney-General, he made this pronouncement. In a federal system, where legislative authority is divided, as are also the prerogatives of the Crown, as between the Dominion and the Provinces, it is my view that it is not open to the Crown, either in right of Canada or of a Province, to claim a Crown immunity based upon an interest in certain property, where its very interest in that property depends completely and solely on the validity of the legislation which it has itself passed, if there is a reasonable doubt as to whether such legislation is constitutionally valid. To permit it to do so would be to enable it, by the assertion of rights claimed under legislation which is beyond its powers, to achieve the same results as if the legislation were valid. In a federal system it appears to me that, in such circumstances, the court has the same jurisdiction to preserve assets whose title is dependent on the validity of the legislation as it has to determine the validity of the legislation itself. 66

No other reference was made to the arguments or to the cases cited. Five judges concurred with the Chief Justice and Mr. Justice Abbott alone dissented. This decision is remarkable more for what it omits to say than for what it says. How did the Court avoid the inhibiting influence of the Privy Council's Lovibond decision, or the whole line of authority starting with Dyson which distinguished between orders directly and indirectly affecting the Crown? Were these decisions repudiated or were they distinguished on the grounds that the receiver order would not directly affect Crown property? Unless the latter represents the 64. Ibid., at 13-14. 65. Ibid., at 14-16. 66. [1962] 5.C.R., at 644-45, 34 D.L.R., at 275-76.

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true decision it is hard to see how the Lovibond case could be other than a binding precedent against the grant of such relief. It is clear from the factums that Lovibond and associated cases were brought to the attention of the Court. And one must assume that Chief Justice Kerwin, who had been the trial judge in the Lovibond case, must have been fully aware of its implications with respect to the order sought by B.C. Power. It might be argued that the Supreme Court's decision herein is of limited scope and not an abandonment of common-law principles of Crown immunity. While the Court does not say so, the order appointing a receiver need not necessarily have been construed as an interference with Crown property in the sense that the Crown would be permanently divested of its interest or title. An order made pendente lite for the preservation of the status quo would be much less serious in its effect than a declaration as sought in the Lovibond case that the Crown never had, and should no longer assert, an interest as cestui que trust in the shares of a railway company. It is submitted, however, that the implications of the B.C. Power case are much wider than this. It should first be noted that Chief Justice Kerwin states his opinion more broadly when he says that "it is not open to the Crown, either in right of Canada or of a Province, to claim a Crown immunity based upon an interest in certain property ..." where the existence of that interest depends on the validity of impugned legislation. This is the clearest and broadest possible denial of Crown immunity from property actions. From this it would appear that in such circumstances even a direct attack on Crown title could be entertained by a court without petition of right. Apart from this, while the order in question in the B.C. Power case was of limited effect, it was still a direct interference with Crown property interests. It is hard to accept the argument of the appellant that the only Crown right involved was that of appointing directors, which right remained untouched. By the Power Development Act the B.C. Electric had been made an agent of the Crown and by the Hydro and Power Authority its assets were transferred to the Authority which was in turn declared to be an agent of the Crown. Surely, as a result, the assets of B.C. Electric, itself an agent of the Crown, transferred to another agent of the Crown, were Crown assets being held for the Crown by its agent. The interference with Crown property interests is at least as clear here as in the Lovibond case where shares were by statute vested in the name of the Minister of Finance as trustee for the Crown. While the Crown would not be

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permanently deprived of title to its property by an order appointing a receiver of that property, it would certainly be deprived of many of the incidents of title-such as the exclusive right of use, possession, and disposition-for a substantial period of time. 67 It must be concluded, therefore, that the Supreme Court has intentionally repudiated the English rule of immunity as applied in Lovibond. It has rejected Crown immunity as a limitation on judicial review in Canada where constitutional issues are involved, even in those jurisdictions which have not removed that immunity by statute. After ninety-five years of fairly consistent Canadian adherence to the rule as developed in the legislative union of the United Kingdom, this judicial innovation should be greeted with enthusiasm. It is hard to deny the logic of the argument suggested in Mr. Brewin's comment in 1936,68 advanced by the appellant in the B.C. Power case, and apparently accepted by the Supreme Court. That is, the prerogative in Canada as enjoyed by the Crown in right of either Canada or of any particular province is a limited prerogative. It has long been settled that the division of prerogative powers in Canada corresponds to the division of legislative powers. 69 Moreover, the property rights of the Crown, which are protected from challenge by the Crown prerogative to refuse a fiat, arise out of legislation the validity of which may be under attack. It is therefore begging the question for the Crown to claim immunity on the grounds that its title is being threatened, because the existence of that title is the very point in issue. This use of the prerogative in a federal state such as Canada could well upset the division of legislative powers prescribed by the British North America Act. As Chief Justice Kerwin said, it would allow the Crown "by the assertion of rights claimed under legislation which is beyond its powers, to achieve the same result as if the legislation were valid." It may be noted in passing that the immunity rule was an anomaly even in England. It had been accepted there for over three centuries that the courts were in other cases entitled to review the legality of the exercise of the prerogative, though not the manner in which it was exercised. That is, the courts could ascertain whether the Crown was acting within the legal limits of prerogative power.70 Unlike the legis67. The order appointing a receiver was made on March 22, 1962. The decision of the trial judge in the action was not handed down until July 29, 1963, in 44 W.W.R. (n.s.) 65 (B.C. Sup. Ct. 1963). 68. Supra note 52. 69. Bonanza case, supra note 61. See also A.-G. for Can v. A.-G. for Ont., [1898) A.C. 247 (P.C). 70. See Heuston, Essays in Constitutional Law, 2nd ed. (1964), 5~81.

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lative power of Parliament, the prerogative power was limited by statute and by judicial decision so that there were grounds for the exercise of judicial review in the maintenance of these limitations. But immunity from suit where the Crown's claim to property was directly attacked precluded review of the exercise of the prerogative in such cases. It is little wonder that the rule was abolished in England by the Crown Proceedings Act, 1947. The decision of the Supreme Court of Canada to modify the rule in a country of divided legislative powers was long overdue. SUMMARY AND CONCLUSIONS

The common-law rules of Crown immunity precluded any actions against the Crown in tort because the Crown was considered to be incapable of committing a tort, and permitted other actions against the Crown only with the Crown's consent. Federal legislation with respect to the liability of the Crown in right of Canada, and provincial legislation with respect to the Crown in seven of the provinces has now eliminated both obstacles to actions against the Crown. Three provinces have not passed such legislation and general rules of Crown immunity apply therein. It would now appear, however, that the Supreme Court of Canada has qualified those rules to the extent of making them inapplicable where the alleged rights of the Crown arise under legislation the validity of which is attacked in the action. Where Crown immunity was formerly a bar to suit, it could constitute an obstacle to effective judicial review of the validity of legislation. That obstacle has now been eliminated, by statute in most jurisdictions and by an authoritative judicial decision binding on the remainder. Thus no longer can governments and legislatures prevent the judicial review of legislation by raising the shield of Crown immunity. In the struggle between judicial review and the prerogative, judicial review has emerged supreme. Some may say that this was inevitable in a federal state. Yet it did not appear inevitable to the Privy Council in the Lovibond case, nor to those who followed or relied on that decision. It was a full ninety-five years after Confederation before the Supreme Court of Canada clearly tested the competing values of crown immunity and judicial review and came down in favour of the latter. Once again the inherited public law of a legislative union was slowly and painfully modified to serve the needs of a modern federal state.

MERVYN WOODS

Judicial Review of the Proceedings of Administrative Tribunals in Saskatchewan

II ADMINISTRATIVE LAW" was unknown to the common law and precise definition is not at hand. For our present purpose, we are concerned with review by the courts of the operations of administrative boards in the province of Saskatchewan. All of these are creations of statute. Boards and tribunals as agencies of government have come to play a significant role in its functions and operations at all levels. Administrative boards exercising judicial functions are often clothed with a very wide discretion in matters of procedure and evidence. In contrast, a judicial tribunal looks to rules of law to guide it. It is not always apparent whether the function exercised by the board is judicial or purely administrative. In Saskatchewan the Depression brought tribunals such as the Debt Adjustment Board 1 and its successor, the Provincial Mediation Board.2 The Farmers' Creditors Arrangement Act, 19343 was a federal statute but in it provision was made for a board of review for each of the various provinces. The operations of these boards led to some review by the courts. The Labour Relations Board was established in 1944 and it has since been the source of most of the references to the courts in the area under discussion. There have, however, been others whose operations have come under judicial review as well. 4

THE TERM

BASES FOR JUDICIAL REVIEW

No appeal lies from the decision of a tribunal unless special provision is made for it. This is true also of decisions of our courts. 1. S.S. 1934-35, c.88.

2. S.S. 1943, c.15.

3. S.C. 1934, c.53.

4. The Highway Traffic Board under The Vehicles Act and the special board of arbitrators under The Mineral Resources Act are examples.

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However, when acting judicially statutory tribunals are subject to the control of the courts in matters relating to jurisdiction and conduct. Where jurisdiction is lacking, where it is exceeded, where the proceedings are conducted in a manner contrary to the rules of natural justice, where there is bias, or where there is an error in law on the face of the record, the matter may come before the court under one of the prerogative writs of mandamus, prohibition, or certiorari. Where provision for appeal is made by statute, such appeal is the obvious means for review by the courts. Where there is no such provision, however, the usual form of attack is by Crown writ. This may lead to a number of issues, including constitutionality. The proceedings may also become the subject of review by the courts if the tribunal launches proceedings for committal for contempt of its orders. Here the purpose of the review is very limited in scope and purpose, but there is review nonetheless. The findings of a number of tribunals are subject to appeal by statute. Our present purpose, however, is to deal with those for which no such provision is made. CONSTITUTIONALITY

In alleging excess of jurisdiction by a tribunal, the attack may be directed at the constitutionality of the statute from which the tribunal derives its powers. It may also, of course, take the position that the tribunal has exceeded powers properly conferred. There have been few of these constitutional attacks on administrative tribunals before our courts in Saskatchewan. In Bruton v. Regina City Policemen's Association5 it was contended that ss.9 and 10 of The Trade Union Act, 19446 were ultra vires of the legislature of Saskatchewan. These sections provided for the filing of certified copies of orders of the Board with the registrar of the Court of King's Bench and for their enforceability as orders or judgments of that court. It was contended that these provisions purported to set up a superior court whose members were not appointed by the Governor General in Council as required by s.96 of the British North America Act, 1867.7 As the Court of Appeal held that the order complained of should be quashed on other grounds, it was not necessary 5. [1945] 2 W.W.R. 273. 6. S.S. 1944 (second sess.), c.69 now included in The Trade Union Act, R.S.S. 1965, c.287, ss. 11, 12(1) and (2). 7. 30 Vic., c.3.

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to consider the question of constitutional validity. However, in the case, In Re Trade Union Act 1944, Labour Relations Board v. John East Iron Works Ltd.,8 the matter received consideration by the Judicial Committee of the Privy Council. In addition to the sections mentioned, s.S(e) of the Act was impugned as well. 9 Lord Simonds made it clear that it was not sufficient to find that in certain of its functions the Board exercised judicial power. Such exercise must be such as to make it a tribunal analogous to a superior, county, or district court to come within the purview of ss.96 to 100 of the B.N .A. Act. He also stated that conversely, the validity of the constitutional status of the Board could not be established by showing that it was, in the main, an administrative instrument. After considering the basis of selection for the members of the Board and the right of appeal given to it, he concluded that the Board was not analogous to the courts mentioned and the impeached sections were intra vires of the legislature. CONTEMPT PROCEEDINGS

Contempt proceedings are rare as well. In Mitchell v. Chadwick, 10 however, the Labour Relations Board sought to enforce one of its orders by an application to the Court of Queen's Bench for an order of committal for contempt. This involves some review by the Court of the Board's activities. However, the Court found that there had been full compliance with the order. NATURE AND USES OF CROWN WRITS

In Credit Foncier Franco-Canadian v. Board of Review under Farmers' Creditors Arrangement Act 1934 and Morrison,11 the Board of Review formulated and confirmed a proposal for the compromise and extension of the debts of a farmer including those of the plaintiff creditor. The farmer then brought an action for a declaration that the Board was without jurisdiction to so do and for an order setting aside the proposal. MacDonald J. held that while the Court of King's Bench had supervisory authority over inferior courts and over tribunals not 8. [1948] 2 W .W .R. 1055, at 1062. 9. This section (now 5(£) of The Trade Union Act) gives the Board authority to require an employer to reinstate a discharged employee under certain circumstances. 10. [1948] 1 W.W.R. 161. 11. [1939] 3 W .W.R. 632.

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strictly courts but performing judicial functions, such authority was exercisable through the prerogative writs of prohibition, mandamus, and certiorari. He went on to find that the proper action for the plaintiff would be to proceed by way of certiorari and that this was not alternative to an action. 12 The action was dismissed accordingly. Attempts are made to use prerogative writs not only as alternatives to actions but also as alternatives to appeals. In re F.C.A. Act, 1934, Huron & Erie Mortgage Corporation v. Propp, 13 before considering the right of the applicant to a writ of certiorari, two of the three judges in the Court of Appeal1 4 first satisfied themselves that there was no right of appeal. In Jim Patrick Ltd. v. United Stone and Allied Products Workers of America, Local 189 and Labour Relations Board, 15 Martin C.J.S. made it clear that while there is a general rule that certiorari will not lie where there is a review by way of appeal available, the restriction does not apply where there has been a denial of natural justice. More recently in Stark v. Council of the College of Physicians & Surgeons of Saskatchewan, 16 it was set out that certiorari was not intended for use as a means to review matters that have already been reviewed by way of appeal. In other words, it is not intended for use as a supplement to appeal. In the Credit-Fancier case, MacDonald J. noted that the writs of certiorari and prohibition both dealt with the question of excess of jurisdiction and that while in their origin they were used by superior courts to restrain inferior ones, their operations have extended to control proceedings of bodies which do not claim to be courts. They extend to bodies having legal authority to determine rights and having the duty to act judicially.17 The Court of Appeal in Wing v. Chang and Chuck and Provincial Mediation Board18 refers to the exhaustive review of the scope and nature of certiorari in Rex v. Nat Bell Liquors19 and states that it applies to all Canadian legislation, federal and provincial. In certiorari, attack is made on an order of a tribunal. This can only be done by one who is aggrieved. In Regina Grey Nuns' Hospital 12. In so holding the learned judge declined to follow Kettenbach Farms Ltd. v. Henke, (1937] 3 W.W.R. 703 (Alta. C.A.) .

13. (1942] 3 W .W.R. 705. 14. Martin C.J.S., at 710, and MacDonald J.A. at 716. 15. (1959), 29 W.W.R. (N.S.) 592. 16. (1965), 55 W .W.R. (N.S.) 121. 17. Supra note 11, at 637, quoting Atkin L.J. in Rex v. Electricity Comm'rs (1924), 1 K.B. 171. 18. (1954), 13 W .W .R. (N.S.) 353. 19. (1922] 2 W .W.R. 30.

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Employees Association v. Labour Relations Board20 there was an order of the Labour Relations Board requiring the hospital to refrain from engaging in an unfair labour practice. The matter complained of was failure to collect union dues from certain employees. Doiron J. held that these employees were aggrieved and accordingly had status to apply for a writ of certiorari, although the order was not directed to them. Application for certiorari is the procedure most frequently used in Saskatchewan courts for reviewing proceedings of tribunals. Mandamus and prohibition have been less frequently put to use. 21 Mandamus is used to compel and prohibition to prohibit an act or course of conduct. Certiorari is often used in aid of one of the other writs for the purpose of bringing the record of the tribunal before the court for review, so that the order may be quashed. It is not always needed, however. In Reg. ex rel. F. W. Woolworth Co. Ltd. v. Labour Relations Board, 22 an application for decertification had been refused by the Labour Relations Board. Proctor J.A. pointed out that certiorari was not needed to support mandamus here because to quash the order would not give relief. 23 In Regina v. Clipsham ex parte Basken, Culliton C.J.5. makes it clear that mandamus only lies where the tribunal in question has failed to exercise a jurisdiction which it possesses or to carry out a duty imposed on it by statute. The applicant must show that the duty is imperative and not discretionary. 24 JUDICIAL TRIBUNALS

To be subject to certiorari, a board must be a judicial tribunal. MacDonald J. so states in the Credit Foncier case. In the Huron & Erie Mortgage case, Martin C.J.5., states it again. 25 In both instances the Board of Review under The Farmers' Creditors Arrangement Act, 1934 was found to be such a judicial tribunal. In the case of In re Trade Union Act 1944, Bruton v. Regina City Policemen's Association, the Court of Appeal held that the Labour Relations Board exercised judicial functions, even though it was not in the ordinary sense of the term a court. Martin C.J.5. stated that to be subject to the writ it is essential that the tribunal should have the power to impose legal 20. [1950) 2 W.W.R. 659. 21. In the cases considered in preparing this article, for example, certiorari was used in about 80%, mandamus in 14%, and prohibition in about 6% of the occasions noted. 22. (1954), 13 W.W.R. (N.5.) 1. 23. Ibid., at page 25. 24. (1965), 49 D.L.R. (2nd) 747, at 751. 25. Supra note 13, at page 709.

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duties and obligations on the parties before it, similar to those which are usually decreed by courts of justice. 26 Having made an order requiring the Chief of Police of the city of Regina to refrain from engaging in an unfair labour practice by refusing to negotiate with the Policemen's Association of the city, the Board was exercising such a judicial function. MacDonald J.A. (Mackenzie J.A. concurring) held that as the order of the Board subjected the Chief of Police to penalties for breach of the order, the Board must be held to be acting judicially. This judgment went on to state that the privative clause in the act 27 which takes away the right to certiorari was a recognition by the Legislature that the Board would act in a judicial capacity in making its orders.28 In Dominion Fire Brick and Clay Products Ltd. v. Saskatchewan Labour Relations Board, 29 the Court of Appeal held that the Labour Relations Board had no status to appeal from an order of the Court of King' s Bench quashing an order of the Board because it was a judicial body. Hence the Board could not be aggrieved by the decision of the court. The parties before it could be aggrieved by the order but the Board could not, as it should "be indifferent as to where the chips fall." 30 However, when the matter was appealed to the Supreme Court, another view was taken. 31 Estey J. stated that an application for certiorari is not an appeal upon the merits. It questions the legality of the proceedings. Where a body, constituted to discharge judicial functions, is questioned in a superior court, it may defend its jurisdiction and carry the cause to appeal. 32 As Lord Simonds stated in In re Trade Union Act 1944, Labour Relations Board v. John East Iron Works Ltd., 33 the borderland in which administrative and judicial functions overlap is a wide one and it is the more difficult to define in a body such as the Labour Relations Board, the greater part of whose functions are administrative. While Lord Simonds did not feel called upon to define in precise terms or to find whether or not the Board was a judicial power,3 4 it was clear that certiorari lies to bring proceedings of the Board before the court.35 26. Supra note 5, at 284. 27. Now s.20 of The Trade Union Act, R.5.5. 1965, c.287. 28. Supra note 5, at 292. 29. [1946) 3 W .W .R. 459. 30. Ibid., per MacDonald J.A., at 464. 31. [1947) 5.C.R. 336; see Kirwin J. at 339 and Kellock J. at 342. 32. Ibid., at 344. 34. Ibid., at 1063. 33. Supra note 8, at 1062. 35. See MacDonald J.A. in In re Trade Union Act 1944, John East Iron Works Ltd. v. Labour Relations Board (No. 3), [1949) 1 W.W.R. 842, at 846.

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In Wing v. Chang & Chuck, McNiven J.A. reiterates that certiorari is not the appropriate remedy where the order complained of is made in pursuance of a purely administrative duty. The yardstick is not the status of the tribunal but rather the nature of the process by which it is empowered to reach its decision. It is only when this process is judicial that certiorari can be granted. The learned judge went on to state that while certiorari applies only to judicial acts the term must be taken in a wide sense. Judicial acts can be distinguished from ministerial acts by the exercise of some right or duty to decide. 36 If this is present certiorari lies at common law. In this case the court found that in applying its wide powers of investigation, the Provincial Mediation Board exercised judicial powers. More recently in In re Trade Union Act, Reg. ex rel. Construction and General Laborer's Local Union No. 890 and Neuman v. Labour Relations Board,37 the Court of Appeal suggests that a decision of the Labour Relations Board to order a vote was an act of a judicial nature and not an administrative act. The term "quasi-judicial" appears in Re Fairburn and Highway Traffic Board,38 where Graham J. refers to the duty of the Highway Traffic Board in dealing with the suspension or revocation of a licence to drive a vehicle. He describes the duty as a "judicial or quasijudicial one" rather than an "administrative one."39 The use of the term, however, does not serve to clarify the problem. It may be that a board that performs administrative and judicial functions could be described as being quasi-judicial. A particular duty or function, however, would be more clearly described if classified as one or the other -that is, as either judicial or administrative for the purpose of deciding whether certiorari lies. JURISDICTION

The general basis for interference by the court in cases where jurisdiction is exceeded was set out in the Huron and Erie case. There the Board of Review under The Farmers' Creditors Arrangement Act made an order that the debtor was inter alia to lease his land rather than to continue to farm it himself. The Court of Appeal held that the Board was not empowered to make such an order. Martin C.J.S. stated 36. 37. 38. 39.

(1954), 13 W.W.R. (N.S.) 353, at 359-60. (1965), 52 W.W.R. (N.S.) 441, at 442-43. (1957), 22 W .W.R. (N.S.) 256. Ibid., at 266.

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that the court had no right to interfere on the ground that the Board had made unreasonable or erroneous findings on matters within its jurisdiction. 40 The Board must act in excess of the jurisdiction conferred on it by the statute before it becomes subject to control by certiorari. However, he held that the Board's actions here were in excess of its jurisdiction. The Bruton case 41 illustrates the application of this principle. There, one pertinent question was whether or not the Chief of Police was an "employer's agent" within the meaning of The Trade Union Act, 1944. The Court of Appeal held that he was not such an agent and, therefore, he was not within the Board's authority. Two of the judges made it clear that the question as to his status as agent was a question of law.42 In other words, the Labour Relations Board gave itself jurisdiction by an erroneous conclusion of law. In the Dominion Fire Brick and Clay case43 Anderson J. held that the Board acted in excess of its jurisdiction because The Wartime Labour Relations Regulations established by the federal government extended to mining operations and the employer here was engaged in mining.44 The Trade Union Act, 1944 specifically excepted from its operations certain employees covered by the Wartime Labour Relations Regulations. 45 Hence the Board lacked jurisdiction and certiorari lay. In Wing v. Chang and Chuck, a landlord gave notice of termination of a lease. The Provincial Mediation Board made an order fixing a new rental rate commencing on a date subsequent to the date of termination. The Court of Appeal46 held that the Board had no authority to do this as it had only power to vary the rental and not the term of the lease under The Leasehold Regulation Act. 47 The same court in In re MacDonald's Consolidated Limited and Retail, Wholesale and Department Store Union 48 held that the Labour Relations Board lacked jurisdiction because the application was not made to it within the time prescribed by The Trade Union Act. In SoconyVacuum Oil Co. of Canada Ltd. and ATZ49 it was held that certiorari 40. 41. 42. 43. 44. 45. 46. 47. 48. 49.

Supra note 13, at 709-10. See supra note 5. MacKenzie and MacDonald JJ.A. [1946] 3 W.W.R. 459 and [1947] S.C.R. 336. In trial judgment, [1946] 3 W.W.R. 200. S.S. 1944 (Second Sess.), c.69, s.2(6)(b). Supra note 18. R.S.S. 1953, c.313, s.4. (1954), 13 W.W.R. (N.S.) 363, per Martin C.J.S. (1955), 15 W.W.R. (N.S.) 411, per Brown C.J.Q .B.

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lay to a board of arbitration set up under The Mineral Resources Act50 because it awarded damages for illegal entry, power to do which it lacked under the governing regulations. In In re Simpsons-Sears Ltd. and Department Store Organizing Committee, Local 1004,51 the Court of Appeal held that the Labour Relations Board exceeded its jurisdiction because in estimating the monetary loss of a discharged employee it failed to take into account the duty on the employee to minimize his loss. This case followed John East Iron Works v. Labour Relations Board of Saskatchewan (No. 3) 52 which was directly in point. The order appealed from in the Simpsons-Sears case included an order for reinstatement as well. The order was held to be not severable so it was quashed in its entirety. Refusal to exercise jurisdiction was found by Disbery J. in Re Labour Relations Board Order Fey et al. v. United Stone and Allied Products Workers of America and Local Union No. 189.53 Here, there was an application for mandamus as well as certiorari when the Board dismissed an application for decertification on the ground that it was not in time. The learned judge found that there was no rule as to time-governing and the Board was without jurisdiction to impose one. Re Trade Union Act, Gunnar Mining Limited and Irwin v. Tunnel, Rock and General Labourers' Local Union 330 54 was a case where the Labour Relations Board incorporated matters set out in a letter into the terms of the formal contract. The Court of Appeal held that under The Trade Union Act the Board had no power to amend, alter, or rectify a collective bargaining agreement so it had exercised a jurisdiction it did not possess and there was error on the face of the record. While orders were quashed for lack of jurisdiction under the variety of circumstances illustrated by the above examples, in a number of instances the courts refused to quash. In F. W. Woolworth Co . Ltd. v. Sask. Joint Board, Retail, Wholesale and Department Sto re Union C.I.0. 55 the Labour Relations Board accepted signed cards with unproven signatures as evidence that a majority of the employees approved of the union as their bargaining agent. While Graham J. expressed concern over the nature of this evidence, he nonetheless dismissed the application for certiorari, holding that the Board had a right to apply its own rules of evidence, and as it had some evidence 50. 51. 52. 53. 54. 55.

R.5.5. 1953, c.47. (1956), 18 W.W.R. (N.S.) 492. (1949), 1 W .W.R. 842 (leave to appeal refused); (1949), S.C.R. 677. (1961), 35 W.W.R. (N.S.) 577. (1962), 39 W.W.R. (N.S.) 287. (1953), 9 W.W.R. (N.S.) 208.

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before it, the court could not interfere on grounds of lack of jurisdiction. Again in Re Trade Union Act, Re Blackwoods Beverages Ltd. and Dairy Employees, Truck Drivers and Warehousemen, Local 834 (No. 2)56 the Board accepted the evidence as to the employees as of the date of filing the application. It refused to consider evidence of subsequent changes. The Court of Appeal held that under The Trade Union Act the Board had an absolute discretion to decide on the evidence before it. It did this and was, therefore, within its jurisdiction. In Perini Limited v. International Union of Operating Engineers, Hoisting and Portable, Local No. 870,57 the order of the Board in designating the employees constituting the bargaining unit did not specifically exclude those with power to hire and discharge. The definition of "employee" in The Trade Union Act did specifically exclude them. The Court of Appeal held that certiorari to quash did not lie. The term "employee" in the order of the Board was not construed as if it were in a statute. Rather its meaning was sought in light of the record and the statute. Regina v. Labour Relations Board ex parte Tag's Plumbing and Heating Ltd. 58 concerned an order of the Board that the employer engaged in an unfair labour practice. Certiorari to quash was sought on the ground that the Board had exceeded its jurisdiction on several grounds. The Court of Appeal held that the court was limited to determining whether the Board acted within its jurisdiction or whether there is an error apparent on the face of the record. The problem is "whether the error is one going to jurisdiction or one on an issue within its jurisdiction."59 A union had been certified in Re Trade Union Act, Army & Navy Department Store Ltd. v. Retail, Wholesale and Department Store Union, A.F.L.-C.I.O.!C.L.C. 60 The Board held that the employer had committed an unfair labour practice by failing to bargain collectively with the union. In support of the application for certiorari to quash, the employer alleged that the union no longer represented a majority of the employees. The Court of Appeal held that so long as the certification order of the union was in effect, the Board was not required to inquire into it on a collateral attack. The question in Re Trade Union Act and Crown Practice Rules, Prince Albert School Unit No. 56 v. National Union of Public 56. 57. 58. 59. 60.

(1956), 18 W.W.R. (N.S.) 489. (1959), 29 W.W.R. (N.S.) 576. (1962), 34 D.L.R. (2nd) 128. Ibid., at 132, per Culliton, Acting C.J.S. (1962), 39 W .W.R. 311.

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Employees Local No. 832 61 concerned the status of some bus drivers. The Appeal Court held that under The Trade Union Act the Board had power to determine who are employees and certiorari would not lie. It was a question of fact in the contract of employment. The case of Re Westeel Products Ltd. and Saskatchewan Labour Relations Board62 followed. Here the Board considered two collective bargaining agreements and in its order held that certain provisions as to adjustment of grievances were binding on the parties. The Court of Appeal, following the Tag's case held that it was for the Board to determine the effect to be given to the agreements as related documents and accordingly dismissed the employer's application for certiorari to quash. Re Trade Union Act; Re Crown Practice Rules; Diehl v. Army & Navy Department Store Ltd. and Retail, Wholesale and Department Store Union A.F.L.-C.1.O.IC.L.C. 63 was an application for decertification. The Board refused it on the ground that it was management inspired. Balfour J. held that certiorari did not lie against such an order because the Board acted within its jurisdiction, following the Tag's and Prince Albert School cases. The latest reported case at the time of writing is the Construction and General Labourers case. 64 Here, on an application for mandamus to compel the Labour Relations Board to exercise its jurisdiction by determining that the unit of employees described in the application was the appropriate unit to bargain collectively, the Board had ordered that a vote be taken. The Court of Appeal allowed the appeal from the granting of a writ of mandamus stating that by ordering the vote the Board was exercising a right given to it by the Trade Union Act. The Board had not dismissed the application so there had been no refusal of jurisdiction. These cases disclose a wide range of matters going to jurisdiction. Applications for prerogative writs were granted for orders against the Labour Relations Board where it interpreted the meaning of "employer's agent" 65 and "mining operations."66 Writs also lay because the Board disregarded provisions of the Act as to time,67 for failing to observe the principle of minimizing loss,68 for imposing 61. 62. 63. 64. 65. 66. 67. 68.

39 W.W.R. 314 (aff'd by S.C.C. Jan. 31, 1963). 39 D.L.R. (2nd) 108. 44 W.W.R. 441. 52 W.W.R. (N.S.) 441. Bruton case, supra note 5. Dominion Fire Brick case, supra note 29. MacDonald's Consolidated case, supra note 48. Simpsons-Sears case, supra note 51. (1962), (1963), (1963), (1965),

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a rule as to time, 69 and for amending a contract. 70 On the other hand, the courts have refused to interfere where the Board accepted unproven signatures as evidence,71 where it refused to accept evidence of subsequent changes, 72 where it described "employee,"73 where it determined who were "employees,"74 where it interpreted the collective bargaining agreement, 75 and where it ordered a vote to assist it in determining the appropriate unit of employees to bargain collectively.76 NATURAL JUSTICE AND BIAS

"Natural justice" has provided the basis for the exercise of supervision by our courts in a number of instances. In the Bruton case, Gordon J .A. gave two reasons for invoking certiorari. 77 These were bias on the part of the Board and the holding of the proceedings in camera. In Re Trade Union Act, 1944, Capital Cab Ltd. v. Canadian Brotherhood of Railway Employees, Brown C.J.K.B. granted an application for certiorari because at the hearing some evidence given to the Board on behalf of the union was not disclosed to the employer. The learned judge stated that the Board was under an implied legal obligation to act strictly within the ambit of its jurisdiction and to act in fairness to all parties free from bias and partiality. 78 In Sisters of Charity Providence Hospital v. Labour Relations Board of Saskatchewan and Textile Workers Union of America,79 the Court of Appeal, in upholding the granting of a writ of certiorari against the Board, stated that the order of the Board could not stand because it gave the employer inadequate notice of some of the evidence with no subsequent opportunity to meet it. The Wing v. Chang and Chuck case was another instance of lack of notice. There was no notice to the landlord of the intention of the Provincial Mediation Board to deal with the property. In allowing the appeal and thus quashing the Board's order by certiorari, McNiven 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79.

United Stone case, supra note 53. Gunnar Mining case, supra note 54. F. W. Woolworth case, supra note 55. Blackwood's case, supra note 56. Perini case, supra note 57. Prince Albert School case, supra note 61. Westeel case, supra note 62. Construction & General Labourers case, supra note 64. [1945) 2 W.W.R. 273, at 287. [1949) 2 W.W.R. 481, at 484. (1951), 2 W.W.R. (N.S.) 66.

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J.A. referred to the fundamental principle of our jurisprudence that no subject should be deprived of his property without an opportunity to be heard unless the opportunity were denied him in the most unequivocal language.80 Recently in Re Trade Union, Brodsky Construction Ltd. v. International Union of Operating Engineers 81 notices were sent in good faith but failed to reach the party in question. Bence C.J.Q.B. held that any error there might be did not go to jurisdiction and refused certiorari. The Court of Appeal, while upholding the result arrived at by the learned chief justice, took the view that the question to be decided was whether or not there had been full compliance with the statute and regulations. If there had been such compliance then certiorari would not lie, notwithstanding that the appellant had in fact received no notice. On the evidence before it the court could not say that the address set out in the application was incorrect. While affidavits filed with the court disclosed a dispute they were not such as to enable the court to say that the order was not regularly issued. A denial of natural justice was alleged as one of the grounds to support an application for certiorari in Re Trade Union Act, MacCosham Storage and Distributing Company (Saskatchewan) Ltd. v. Canadian Brotherhood of Railway Employees and Other Transport Workers Division Number 189; 82 Culliton J.A. (now C.J.S.) held that where a denial of natural justice is alleged the court may look to affidavit evidence to ascertain the facts but these facts must be related to the matters at issue and not to matters extrinsic and extraneous. He then found that the portions of the affidavits filed which were relevant did not sustain the allegation that the Board had no creditable evidence before it. Refusal to adjourn the hearing of an application in the absence of the only shareholder of the employer who could instruct counsel was held to be contrary to the rules of natural justice in the Patrick case. In this case, too, it is stated that the general rule that certiorari does not lie where there is a remedy by way of review on appeal does not hold where there has been a denial of natural justice. 83 It is also set out that certiorari will lie where the Board apparently acts within its jurisdiction if there is a denial of natural justice.84 80. Supra note 18, at 358. 81. (1967), 58 W.W.R. (N.S.) 618; Court of Appeal judgment dated July 11, 1967 not reported at time of writing. 82. (1958), 25 W.W.R. (N.S.) 422. 83. Supra note 15, per Martin C.J.S., at 600 et seq. 84. Ibid., per Gordon, J.A. at 606.

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A further illustration is found in Re Fairburn and Highway Traffic J. held that failure to give the holder of a driver's licence the opportunity to appear at a hearing of the Highway Traffic Board at which his licence was suspended was grounds for certiorari. Board85 where Graham

PRIVATIVE CLAUSES

Provisions limiting judicial review of administrative tribunals are not uncommon. In Saskatchewan, for example, s.26 of the Vehicles Act, 1957,86 states that all decisions of the Highway Traffic Board shall be final. The Trade Union Act, 1944 s.15, stated that there shall be no appeal from an order or decision of the Board and the Board shall have full power to determine any question of fact necessary to its jurisdiction, and its proceedings, orders, and decisions shall not be reviewable by any court of law or by any certiorari, mandamus, prohibition, injunction, or other proceeding whatsoever. This section is referred to as "the privative clause" of the Act. 87 The Bruton case brought the question of the effect of this section before the Court of Appeal. The Chief of Police of the city of Regina applied for certiorari for the return of an order of the Labour Relations Board directing him to refrain from engaging in the unfair labour practice of refusing to negotiate with the local of the Regina City Policemen's Association. In dealing with this privative clause it was held that such a statutory provision was not wholly effective because the courts will still issue certiorari where a judicial tribunal makes the order without jurisdiction. 88 After finding that the Board was a judicial tribunal within the context of this rule, the court proceeded to find that there was an error in the Board's finding that Bruton was an "employer's agent" within the meaning of the Trade Union Act, 1944. This conclusion was arrived at by considering the provisions of The City Act governing his rights and duties. The Board was accordingly held to be without jurisdiction and certiorari lay. One judgment placed it squarely on the basis of the error being one of law on the face of the record. 89 85. Supra note 38, at 257. 86. R.S.S. 1965, c.377. 87. Now s.20, The Trade Union Act, R.5.5. 1965, c.287. An amendment in S.S. 1966, c.83, s.12 removed the words setting out the power to determine any question of fact necessary to jurisdiction. 88. Supra note 5, at 283, per Martin, C.J.5. 89. That of MacDonald J.A., ibid., at 295 et seq.

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The Bruton case marked the first major pronouncement of the courts on this privative clause. Martin C.J .S. stated: "A statutory abolition of the right to certiorari is not wholly effective, for it is clearly established by authority that, notwithstanding a provision in a statute abolishing certiorari, the Courts will still exercise the power to issue the writ where the conviction or order complained of has been made without jurisdiction."90 In this case various members of the court directed their attention to mistake in law, misinterpretation of the act, bias, and breach of natural justice as bases for issuing the writ. The case has been the subject of extra-judicial comment on its dealings with the question of jurisdiction.91 However, it did make it clear that such a privative clause does not deprive a superior court of its right to supervise an inferior court or administrative tribunal in the exercise of their jurisdiction. The decade following the passage of The Trade Union Act, 1944, saw a number of applications of the concept of jurisdiction, many of which are referred to above. 92 The facts were admitted by the parties in the MacDonald's Consolidated case and set forth in the application. The order of the Board substituted the international union for the local as a party to the collective bargaining agreement. The Trade Union Act limits the time and method of revision of such agreements. 93 The Court of Appeal held that the provision in the privative clause giving the Board the exclusive right to determine questions of fact did not apply here. 94 The facts were admitted by the parties and, as these showed noncompliance with the Act, the Board was without jurisdiction. Certiorari accordingly lay to quash the order. The next milestone was the case of Marshall Wells Co. Ltd. v. Retail, Wholesale & Department Store Union Local No. 454. 95 Here, the Court of Appeal made it clear that, where there is error of law on the face of the record, certiorari would lie in face of the privative clause. This decision has also been the subject of extra-judicial comment96 in that it relied upon Regina v. Northumberland Compensation 90. Ibid., at 283. 91. See P. J. Millward, "Judicial Review of Administrative Authorities in Canada" (1961), 39 Can. Bar Rev., 351, at 380; Bora Laskin, "Certiorari to Labour Boards: The Apparent Futility of Privative Clauses" (1952), 30 Can. Bar Rev. 986, at 996; B. L. Strayer, "The Concept of 'Jurisdiction' in Review of Labour Relations Board Decisions" (1963), 28 Sask. Bar Rev. 157, at 160. 92. See supra under "Jurisdiction" p. 97. 93. R.S.S. 1965, c.287, s.26. 94. A provision no longer in the Act. See note 87. 95. (1955), 4 D.L.R. (2nd) 591. 96. Millward, supra note 91, at 359.

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Appeal Tribunal, 91 in which case the court was not concerned with a privative clause. Two more recent cases have specifically directed attention to the area of review open to the courts on certiorari applications in face of the privative clause. In the Tag's case, Culliton J.A. stated: Where there is such a privative clause, I think the law is well settled that the Court in certiorari proceedings is restricted to determining whether or not the inferior Court or tribunal acted within its jurisdiction (including matters akin thereto, such as bias, denial of natural justice, fraud, etc.), or whether there is error on the face of the record . . . .98 In the Prince Albert School Unit case the learned Justice restated it thus: . . . in the disposition of issues within the board's jurisdiction, its decisions are not open to judicial review, including certiorari, even if there was error in fact or law . ... To be subject to judicial review by way of certiorari there would have to be error apparent on the face of the record, or error in the disposition of a matter extrinsic or collateral to its jurisdiction upon which its jurisdiction is dependent. 99 The question for decision in every case then is whether or not the tribunal had jurisdiction to make the order. In the Westeel case100 it is set out that, having entered upon an inquiry on a matter within its jurisdiction the tribunal may miscarry on any question of fact or law within that jurisdiction. In Regina ex rel. Construction and General Laborer's Local Union No . 180 and Sebastian v. Labour Relations Board and Graham Construction,101 Disbery J. gave several illustrations of the application of this principle. There certiorari was sought on several grounds. These were error in law, manifest on the face of the record, and excess of jurisdiction in making certain findings. Following the Tag's case, the learned judge dismissed the application. He held that if the Board erred in law while exercising its jurisdiction the court could not correct it. He also found that, in making the findings complained of, the Board was dealing with questions within its jurisdiction and that any error in determination was accordingly not subject to review. In the result the courts can review by certiorari allegations that challenge the jurisdiction of the Board. "Jurisdiction" for this purpose includes error apparent on the face of the record and error in matters collateral to its jurisdiction but upon which jurisdiction depends as 97. (1951), 1 K.B. 711;

aff'd on appeal (1952) 1 K.B. 338. 99. Supra note 61, at 316. 101. (1966), 56 W.W.R. 133.

98. Supra note 58, at 131. 100. Supra note 62, at 110.

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set out in these cases. The result is a clear statement of principle that limits the area for decision to the question of jurisdiction. These cases have also been the subject of extra-judicial comment,102 particularly with regard to the extent of the concept of jurisdiction established. It would seem, however, that the principle is clearly established. The problem is accordingly narrowed to that of application. ERROR ON THE FACE OF THE RECORD

In the John East (No. 3) case the order of the Labour Relations Board showed that loss to the employee for days off work had been computed on the basis of wages lost. As no account was taken of possible mitigation of loss by other employment, the Court of Appeal held that there was an error of law apparent on the face of the record. In Utah Co. of The Americas v. International Union of Operating Engineers, Hoisting and Portable Local No. 870, 103 it was contended that there was error on the face of the record where the terms of the collective bargaining agreement provided for a term of duration different from that required by The Trade Union Act, 1944,1°4 and the Board ordered the employer to negotiate at the end of the term provided by the statute. The Court of Appeal held that as there was no error certiorari did not lie. The case of Regina v. Labour Relations Board of Saskatchewan ex parte Army & Navy Department Stores Ltd. provides another example. Here, there were 72 cards submitted by the union to the Board. Before these were delivered to the employer, it had received revocation from 44 employees. When the Board found that the employer had committed an unfair labour practice by honouring the instructions from the 44 employees, the employer applied for certiorari to quash the order. As the order of the Board recited the revocation by the 44 employees of the authority in the cards the Court of Appeal found that the error was apparent on the face of the record. 105 It is noted also that in the Tag's case the Court of Appeal referred to the Bruton case as one of error of law on the face of the record. The requirements of the record were discussed in the John East case, where MacDonald J.A. stated that it is the duty of the Board to find the facts and to record them. However, in the Tag's case it was 102. 103. 104. 105.

Strayer, supra note 91. (1959), 29 W.W.R. (N.S.) 633. Presently found in R.S.S. 1965, c.287, s.30(1) . (1962), 34 D.L.R. (2nd) 149, per Culliton, Acting C.J.S., at 153.

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made clear that this does not require the Board to record the evidence upon which its findings are based. In this case the facts as found were recorded in the order of the Board and this was held to meet the requirements of the Act as to recording the facts. CONCLUSION

The passage of The Trade Union Act, 1944, marked an upsurge of applications for Crown writs to review the actions of the Labour Relations Board. The Bruton case established that, in spite of the privative clause in the Act, the courts could still issue writs when jurisdiction was challenged. Absence or lack of jurisdiction, the traditional grounds for certiorari, were held to be necessary and sufficient to deprive the privative clause of absolute effectiveness. This was in 1945. In the years that followed, in the many cases discussed above, the courts of the province wrestled with the problems attendant upon this principle. It was not, however, until the Tag's and the Prince Albert School Unit cases in 1962 that the area of jurisdiction contemplated by this privative clause was determined. The clause remains in the statute, but in an altered form. 106 However, these cases have clarified the question of what is contemplated by "jurisdiction." The problem of applying the principles to new factsituations is of course ever present. 106. R.5.5. 1965, c.287, s.20. Cf. S.S. 1966, c.83, s.12 which deletes from s.20 of the Act the clause stating that the Board has power to determine any question of fact necessary to its jurisdiction.

W. R. LEDERMAN

Legislative Power to Create Corporate Bodies and Public Monopolies in Canada

concerning private corporations and public monopolies have been brought into sharp focus in recent years by events in British Columbia-namely the attempted expropriation of the British Columbia Electric Company by the provincial government. The B.C. Electric Company was incorporated under the Companies Act of British Columbia and carried on the business of generating and supplying electricity in a large area of the province, including Greater Vancouver. It also transmitted and supplied natural gas through pipe lines and operated rail transport and motor buses. All the common shares of the B.C. Electric Company were owned by the British Columbia Power Corporation, a dominion company incorporated as a public utility investment company under the Companies Act of Canada. Thus the provincial operating company was a wholly owned subsidiary of the dominion investment company. Moreover, the operating company was in substance the sole business and asset of the investment company. The directors and principal officers of the two companies were the same persons.1 In 1961, the government of British Columbia decided to take over the B.C. Electric Company and to operate it as a public utility monopoly under a new provincial government agency, the B.C. Hydro and Power Authority. To this end the legislature of British Columbia passed what the government deemed to be appropriate legislation. The statutes concerned purported to accomplish the result the government wanted by the following provisions. (1) The B.C. Power Corporation was divested of its shares in the B.C. Electric Company and FEDERAL CONSTITUTIONAL ISSUES

1. See British Columbia Power Corporation Limited v. Attorney-General of British Columbia et al. (1963), 44 W.W.R. 65; (1965), 47 D.L.R. (2d} 633 (B.C.S.C.); (henceforth referred to as B.C. Power case) .

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they were vested in the province of British Columbia (the provincial Crown). (2) The B.C. Power Corporation was to be entitled to a specific sum of money from the provincial treasury as compensation for the shares and was forbidden to apply to the courts for review or revision of the adequacy of the amount. After one upward revision by legislative amendment, the statutory sum stood at $171,000,000 (in round figures) . (3) The physical and financial assets of the B.C. Electric Company, and also its liabilities, were vested in the new B.C. Hydro and Power Authority, an agency of the provincial government. 2 This then was the final form of the statutory scheme for the take-over. The B.C. Power Corporation resisted these arrangements and attempted to challenge in court the validity of the statutes concerned on the ground that they were beyond the powers of the provincial legislature under the British North America Act. 3 The statutes were alleged to be ultra vires of the province on three grounds (the first two being the principal grounds): (1) that they interfered improperly with the status and powers of a dominion company; (2) that the industrial utility enterprises involved extended in some of their operations beyond the boundaries of British Columbia and thus these enterprises were completely out of reach of provincial regulation in any event, being subject only to regulation by the Canadian Parliament; and (3) that the statutes interfered improperly with the implementation of the Columbia River Treaty between Canada and the United States of America. These are each very extensive subjects, and this essay deals only with the issues concerning corporations and company law expressed or implied by the first point. To start with, there was a preliminary issue of whether the Supreme Court of British Columbia could hear and determine the case at all, and this point was taken on appeal to the Supreme Court of Canada. That tribunal re-affirmed the established proposition-essential to judicial review in a federal country-that access to the courts cannot be denied any person having a proper interest in challenging the validity of a statute under the distribution of legislative powers in the federal constitution. 4 So the B.C. Power Corporation was granted its day in court on the substantive issues of validity, and the "day" in court turned out to be a trial lasting 144 days before the late Chief 2. The Power Development Act, 1961, 5.B.C. 1961 (2nd Sess.), c.4; The Power Development Act, 1961, Amendment Act, 1962, 5.B.C. 1962, c.50; The British Columbia Hydro and Power Authority Act, 5.B.C. 1962, c.8. 3. 30 & 31 Viet., c.3. 4. B.C. Power Corp. Ltd. v. B.C. Electric Co. Ltd. and Attorney-General for B.C. et al. (1962), 34 D.L.R. (2d) 196, at 275-76.

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Justice Sherwood Lett, who gave judgment on July 29, 1963. The judgment occupied nearly 300 pages in the law reports. 5 In the first half Chief Justice Lett developed his reasons for holding the statutory take-over scheme to be ultra vires on both the principal grounds alleged. The second half of the judgment he devoted to a judicial determination of the value of the shares of the B.C. Electric Company, having admitted evidence and expert financial testimony in this regard. The Chief Justice concluded that the shares of the B.C. Electric Company were worth $193,000,000 (in round figures). A short time later, its bargaining position much strengthened by the Supreme Court of British Columbia as indicated, the B.C. Power Corporation sold out voluntarily to the British Columbia government, presumably at an acceptable price. Because of this there was no appeal from the judgment of Chief Justice Lett, nor is there likely to be one-a most unusual situation in a constitutional case of such significance. Before examining the company-law ground on which the Chief Justice held the provincial take-over legislation ultra vires, a preliminary point should be made. It is quite fascinating in this case to see how certain established principles of interpretation of our federal constitution had the indirect effect of promoting fair play and a fair price when eventually there was a voluntary sale of the B.C. Electric Company by the B.C. Power Corporation to the provincial government. The principle that put the B.C. Power Corporation into court in the first place has already been mentioned-that access to the courts cannot be legislatively denied to an interested party where it is reasonable to think that there may be an issue to be tried concerning the constitutional validity of the legislation concerned. This refers of course to the normal question of intra or ultra vires of the enacting legislative body under the B.N.A. Act. So the trial before Chief Justice Lett proceeded, and at this point a second interpretative doctrine came into play. To settle whether the challenged take-over legislation was valid or invalid, its true nature or character had to be judicially determined in relation to the heads of power listed in the B.N.A. Act. Such characterization often depends critically on what the effects of the challenged legislation would be if it were to be put in force and applied according to its terms. Hence it has long been the rule that extrinsic and expert evidence may be admitted as to what the effects 5. The full report is given only in the Western Weekly Reports. The Dominion Law Reports covered only the constitutional points, not the evidence and conclusions on valuation of the shares of the B.C. Electric Company. See note 1.

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of such challenged legislation would be. Chief Justice Lett noted that the constitutional issue of undue discrimination against a dominion company was one of the issues potentially in the case, and that this might involve (at least in a higher court on appeal) whether the value set by the provincial take-over legislation on the shares of the B.C. Electric Company was a fair and proper one. Hence he admitted evidence and expert testimony on the true and proper total value of the shares of the B.C. Electric Company.6 In this way he judicially determined a figure that could be compared with that set in the provincial take-over legislation, for the purpose of reaching conclusions about "discrimination" or "unfairness." As indicated, the judicially determined value came out well above the figure set in the take-over legislation. One should not make too much of this. We do not have here a full fledged rule of no expropriation without judicially determined compensation. Evidence of value was not being admitted as part of a mandatory determination of the proper compensation. Rather, it was being admitted as a possible aid to the characterization of the take-over legislation so as to determine whether it was invalid and completely inoperative, or valid and completely effective. (In the former event, the whole legislative attempt at expropriation would fail.) Nevertheless, this judicial determination of value for the limited purposes of constitutional interpretation did, no doubt, strengthen the bargaining position of the B.C. Power Corporation when it decided to sell out voluntarily if it could get a considerably better price than that set in the take-over legislation. In other words, interpretative constitutional doctrine under the B.N.A. Act made it proper for the Chief Justice to admit relevant evidence of money value, though the court had no power to enforce its valuation as a compensation figure. Nevertheless, once the judicial figure was set and published, the provincial government could not easily disregard it. So one ends up with something pretty close to compulsory judicial determination of compensation. It would seem that any dominion company in a position more or less like that of the B.C. Power Corporation could take this same path to a public judicial determination of the value of its assets. Be that as it may, Chief Justice Lett did find the take-over legislation ultra vires of the province on grounds unrelated to the actual true valuation of the shares of the Electric Company, and we must now examine his reasons and their implications. The main question to be examined in this essay is the extent to which a dominion 6. B.C. Power case, 44 W.W.R. at 194.

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company can be subjected to provincial laws regulating the enterprise, business, or industry in which the company is engaged under its federal charter. Pressed to its limits this includes the question whether a dominion company can be entirely displaced by provincial laws purporting to establish a partial or complete provincial public monopoly in the province of the enterprise, business, or industry concerned. This in turn calls for some consideration of provincial as well as federal powers to create corporate bodies and provincial as well as federal powers to regulate particular kinds of businesses or industries. Obviously, exhaustive treatment of this subject would require a book-length treatise. All that can be attempted in this short paper is the exposition of some main lines of reasoning suggested by leading cases, in order to establish certain principal guide lines for solving this type of problem under the B.N.A. Act. One of the primary distinctions to be made is between legislative power to create corporate bodies on the one hand and legislative power to regulate a specific type of business or industry on the other hand, whatever legal persons, corporate or natural, happen to be engaged in that business or industry. Both the dominion Parliament and the provincial legislatures may create corporate bodies, with some limits on the provincial power. Also, power to regulate particular types of business or industry is divided. Fire insurance is a local business and coal mining a local industry each of which falls under provincial jurisdiction. On the other hand, banking is a business and interprovincial transport an industry each of which falls under federal jurisdiction. This two-way distribution of regulatory power over types of business and industries does not follow the same lines as the two-way division of legislative power to create corporate bodies. And this is so even though creating a corporate body does involve endowing it with capacity to engage in a certain type of business or industry or indeed in a wide or even unlimited range of such enterprises. But while there is an extent to which incorporation and regulation are separate matters, nevertheless there is also an extent to which they interact and come together, as we shall see. In this connection, the well-known aspect doctrine of interpretation respecting the B.N.A. Act becomes of great importance. Let us look now at the nature of corporate bodies and the respective federal and provincial powers to create them. When attempting to define the power of incorporation, general jurisprudential learning about legal personality and the nature of corporations is highly rele-

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vant. What we have in the usual business or industrial corporation is a contrived legal person constructed by the law of the state by analogy to the only natural legal person, the human individual. The unity of the corporation is an organizational unity formed by the enabling legislation and is not a natural occurrence or creation as is the organic unity of the human individual. But it is not accurate on this account to designate the corporation as "artificial." Its organizational unity is real enough, and so are the corporate purposes and the human individuals involved in pursuit of those purposes, whether as officers, directors, shareholders, or employees. The physical and financial assets dedicated to the corporate purposes under the regime of company law are also real and not artificial. This view of the nature of corporate bodies is favoured by Dr. Martin Wolff in his famous essay "On the Nature of Legal Persons." He points out that this is the essence of the fiction theory of corporate legal personality, the theory most widely accepted in the common-law world. The word "fiction" is employed here in the sense of abbreviation and analogy, not in the sense of unreality and untruth. Dr. Wolff puts it this way: To sum up:-The value of the fiction formula is that it starts from a natural, extra-juristic conception of personality, as founded in ethics and religion and then adds that certain groups and institutions determined by law, though lacking in supreme, that is human dignity, are nevertheless treated by law as if they were human persons. I believe that lawyers should lay stress on the intertexture of law with other values governing human life, conduct and thought. Those who advocate isolated jurisprudence may reject the fiction formula. 7 Accordingly, we find that the corporate body is a complex organization of human individuals who have certain limited objectives in common. The corporation is enabled by law to carry on to some extent as a legal unit, that is, as if it were itself a single human individual apart from its officers, directors, employees, and shareholders. Nevertheless, the analogy only holds good for limited purposes. To regard a corporation as if it were itself a single separate real person is accurate enough as a figure of speech if one is thinking of the normal operation of the company as a going concern in relation to outsiders. But many issues concerning companies can only be properly considered in the light of the true complexity of the corporate organization, and the more difficult the problem the more true this is. Examples include the special rights of minority shareholders and the constitutional status of 7. (1938), 54 L.Q.R. 494,

at 507.

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a dominion company in relation to provincial legislation under our federal constitution. We must never forget what the late Professor Hohfeld has said: When all is said and done, a corporation is just an association of natural persons conducting business under legal forms, methods and procedures that are sui generis. The only conduct of which the state can take notice by its laws must spring from natural persons-it cannot be derived from an abstraction called "the corporate entity." ... ultimately the responsibility for all conduct and likewise the enjoyment of all benefits must be traced to those who are capable of it, that is, to real or natural persons. 8 So the business or industrial corporation is in truth a complex organization of human individuals enabled to act as a separate legal unit for the approved corporate objects. The board of directors, the principal officers, and the shareholders, acting within the regime of company law, provide the centralized decision-making necessary for action as a unit. The corporate organization as such is thus empowered to own assets, make contracts, and to sue and be sued as a separate legal entity. This indicates to some extent the proper logical scope of the idea of incorporation. A dominion fire insurance company, for example, is enabled to make fire insurance contracts in a province as a separate legal entity, that is, as if it were itself a separate human individual. But the dominion charter does not go beyond this to render the company invulnerable to provincial statutory regulation of fire insurance contracts. The human adult as a citizen doing business in his own name in a province would be subject to such regulation; why should any corporate person as a going concern be in a better position? It soon became apparent, of course, in the B.C. Power case that easy or superficial talk about the nature of corporate persons would solve nothing. One of the outstanding features of the judgment of Chief Justice Lett is that he "pierced the corporate veil" and spelled out the business and economic truth of just what it was that the provincial take-over legislation would really do. 9 Counsel for the province argued that all it did was to dispose of the shares of a provincial company, and as such was valid provincial company legislation. But Chief Justice Lett probed for the organizational and economic realities of the situation. He found that the real officers of the Electric Company were the officers of the Power Corporation and that the real 8. "Nature of Stockholders' Individual Liability for Corporation Debts," (1909), 9 Columbia LR. 285, at 289-90. 9. B.C. Power case, 47 D.L.R. (2d), at 700-707.

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shareholders were the shareholders of the Power Corporation, since the Power Corporation held all the shares of the Electric Company. Accordingly, if the provincial legislation was company legislation, it was legislation dealing with the assets of a dominion company and was to be judged as to its validity in that light. At this point, counsel for the province argued that if the B.C. Power Corporation was a public utility investment company, then they could take the money being paid them for the shares in question and invest in some other public utilities in some other place. In these circumstances, he argued, they could not complain that their status or function as a dominion investment company was being impaired. But Chief Justice Lett took evidence from the principal executive officer of the B.C. Power Corporation about the actual business and economic situation concerning reinvestment. It appeared that there just were no public utility enterprises like the B.C. Electric System up for sale anywhere, so that, in the practical business sense, the B.C. Power Company could not carry on if the take-over legislation were applied. There would then be no alternative to a winding up. Chief Justice Lett accepted the truth of this evidence, and so went on to consider the law concerning circumstances in which a dominion company could be put out of business by provincial legislation. As background for this central issue it is necessary now briefly to review the respective provincial and federal company law powers under the B.N.A. Act. The provincial power of incorporation is given in s.92(11) of the B.N.A. Act, "The Incorporation of Companies with Provincial Objects." In the case of the Companies Reference to the Supreme Court of Canada, the critical questions about the extent of this power were asked. 1. What limitation exists under the British North America Act, 1867, on the

power of the provincial Legislatures to incorporate companies? What is the meaning of the expression "with provincial objects" in s.92, art.11, of the said Act? Is the limitation thereby defined territorial, or does it have regard to the character of the powers which may be conferred upon companies locally incorporated, or what otherwise is the intention and effect of the said limitation? 2. Has a company incorporated by a Provincial Legislature under the powers conferred in that behalf by s.92, art.11, of the British North America Act, 1867, power or capacity to do business outside the limits of the incorporating province? If so, to what extent and for what purpose?10

The case reached the Privy Council, and when judgment was given there in 1916, Viscount Haldane said: "Questions 1 and 2 are 10. A.-G. for Ontario v. A.-G. for Canada, (1916) 1 A.C. 598, at 599.

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answered as sufficiently as is expedient in the judgment given in Bonanza Creek Gold Mining Co . v. The King." 11 In the Bonanza Creek case, Viscount Haldane also gave the judgment and made clear that he considered that the province of Ontario could, by either executive or legislative act, create a corporate body with the full capacity of a natural person. In the economic field, this would mean a corporate body with powers to engage in any type of business or industrial activity within the territorial limits of the province-the so-called common-law corporation. The natural adult human individual can engage in the whole range of financial and industrial objects as a matter of his capacity, and that is the analogy here. In other words, a provincial company can be authorized as a legal entity to engage in any type of business or industry and there is no necessary limitation to businesses or industries that, as such, fall legislatively within the scope of s.92 of the B.N.A. Act. The phrase "with Provincial Objects" has territorial connotation only, meaning that the provincial company can operate only within the territory of the incorporating province by virtue of its provincial charter. Even then, as a corporate entity, it can walk abroad and receive power to do business in another province, state, or country provided the appropriate governmental authority of that other province, state, or country recognizes it and grants it power to operate there. In any event, the point is that the power of a provincial government to authorize a provincial company to pursue any type of enterprise in the home province means that the distinction asserted earlier must be made. That is, that the power to incorporate must be distinguished from the power to regulate various types of businesses or industries in which corporate and other persons of all kinds engage. Jurisdiction in this latter regard is divided in our federal system. For example, some provincially chartered financial institutions (the so-called "near banks") certainly engage to some extent in the banking business, and banking as a business is clearly under federal regulatory jurisdiction by virtue of s.91(15) and (16) of the B.N.A. Act. In this respect, if it chooses to do so, the federal Parliament can regulate provincial corporations with legislation that is in pith and substance banking legislation. Another, and perhaps even stronger example is provided by the well-known Johnny Walker case. 12 In 1921 the province of British Columbia established a governmental monopoly of the sale of alcoholic beverages in the province, carried on directly by 11. [1916) 1 A.C. 566. 12. A.-G. of B.C. v. A.-G.

of Canada,

[1924) AC. 222, at 225.

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the Crown in right of the province. The Crown Provincial purchased a case of Johnny Walker Black Label whisky in Scotland and had it shipped to the province. When it arrived, the federal government demanded that the customs and excise taxes levied under federal statutes be paid by the Crown Provincial. The province refused, claiming immunity from such taxation under s.125 of the B.N.A. Act, which reads as follows: "No Lands or Property belonging to Canada or any Province shall be liable to Taxation." The Privy Council made short work of the provincial argument; Lord Buckmaster said: The imposition of customs duties upon goods imported into any country may have many objects; it may be designed to raise revenue or to regulate trade and commerce by protecting native industries, or it may have the two-fold purpose of attempting to secure both ends; in either case it is a power reserved to the Dominion. It has not indeed been denied that such a general power does exist, but it is said that a breach is created in the tariff wall, which the Dominion has the power to erect, by 5.125 which enables goods of the Province or the Dominion to pass through unaffected by the duties. But 5.125 cannot, in their Lordships opinion, be so regarded .... The Dominion have the power to regulate trade and commerce throughout the Dominion, and, to the extent to which this power applies, there is no partiality in its operation. Sec. 125 must, therefore, be so considered as to prevent the paramount purpose thus declared from being defeated.

The Crown Provincial was required to pay the duties. This seems to be a normal application of the all-pervasive aspect theory of constitutional interpretation. The importation of goods into Canada is a business subject to federal regulation under the trade and commerce clause. The statutes levying duties here were genuine international trade legislation, among other things, and the trade aspect was primary. That these same statutes called on the Crown Provincial to pay certain taxes was only incidental, power being assigned according to the primary and not the secondary aspects of the legislation in question. There is nothing to prevent the Crown Provincial from taking advantage of its common-law corporate personality and, as a corporate entity, engaging in the importation of goods like other corporate or natural persons. But, in so doing, it engages in a federal business and is subject to federal regulation. Another way of putting this point is to say that, when the Crown Provincial engages in a business or industry subject as such to federal regulatory jurisdiction, then the Crown Provincial is no longer the Crown for these purposes; it is just another corporate entity in the total population of legal persons. The Crown Provincial is the Crown

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for all purposes within the scope of s.92 of the B.N.A. Act, but it is not the Crown once it operates in a field outside of s.92 and within s.91. 13 It continues as a corporate legal entity, but not as the Crown, when operating in the area of the federal regulatory power over business or industry. We come now to the federal power to create corporate bodies, and the same points should be made concerning the separation of the regulatory and incorporating powers. The only specific federal power of incorporation mentioned in the B.N.A. Act is the "Incorporation of Banks" in s.91(15). But it is well established that plenary power to incorporate companies with objects wider than or beyond provincial objects is provided by the federal general power contained in the opening words of s.91 of the B.N.A. Act. 14 We have already seen that "with Provincial Objects" in s.92(11) has a territorial connotation only and is not a limitation by subjects of potential corporate activity. It follows then that the expression "objects wider than provincial objects" likewise has territorial connotation only and is not a limitation of federal corporate objects to subjects outside provincial regulatory jurisdiction. What it does mean is that a federal charter may make the original territorial base of a dominion company the whole or any part of the territory of Canada. But the range of subjects that may be given a dominion company for its corporate purposes is unrestricted, as is the case with provincial companies. There is no question but that the federal authorities can create a common-law corporation. Of course, also, a dominion company may walk abroad beyond the territory of Canada if the government of the other state or country will recognize it. Once again, the point is the separation of incorporation from regulation as explained earlier. For instance, in the case of Citizens Insurance Company v. Parsons (1881), 15 the essential federal power of incorporation was affirmed as just stated, but the Citizens Insurance 13. Liquidators of the Ma ritime Bank of Canada v. Receiver-General of New Brunswick, [1892] A.C. 437, where Lord Watson said at 443 " . .. a Lieutenant Governor, when appointed, is as much the representative of Her Majesty for all purposes of provincial government as the Governor-General himself is for all purposes of Dominion Government." My point then is that it follows that a provincial government is not the "Crown" for purposes outside of provincial legislative jurisdiction under our federal system, though it retains its ordinary corporate personality in this outside area. See also per Kerwin C.J. in the passages referred to in note 4, supra. 14. The authorities are reviewed by Chief Justice Lett in the B.C. Power case, 47 D.L.R. (2d), commencing at 685. 15. (1881-82), 7 A.C. 96.

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Company of Canada, a dominion company, was held to be subject to the fire insurance legislation of the province of Ontario specifying compulsory terms to be included in any fire insurance contract written in Ontario. Insurance as a business was held in this and other cases to be under provincial regulatory jurisdiction. Also, in the Empress Hotel case,16 the Canadian Pacific Railway, operating under federal charter, was told by the Privy Council that, insofar as it was conducting a hotel business in Victoria, it was subject to general provincial industrial legislation setting maximum hours of work for hotel employees. The net result is then that certain provincial laws may properly apply to certain dominion companies, and certain federal laws may properly apply to certain provincial companies. But is the dominion company in a special position? What are the limits of the applicability of provincial laws to dominion companies? Chief Justice Lett went through the many cases on this subject very exhaustively in considering whether the B.C. Power Corporation could be put out of business by provincial legislation.17 Until now, in this essay, stress has been laid on the distinction between the power to create corporations and the power to regulate the businesses or industries in which natural or corporate persons may engage. This is a valid and necessary distinction up to a point, but the stage comes where the two powers logically run together and priorities must be established. The plenary power to regulate a business or industry would normally include as one of its features the power to determine what corporate or natural persons may engage in that business or industry. For instance, what if a provincial government decided that partial or complete monopoly (public or private) is what is needed as the form of regulation of a provincial business or industry? Can a dominion company then be put out of business by provincial legislation? One of the classic statements of the special position of a dominion company is found in the case of John Deere Plow Co. v. Wharton (1916),18 where Viscount Haldane said: It is true that even when a company has been incorporated by the Dominion Government with powers to trade, it is not the less subject to provincial laws of general application enacted under the powers conferred by sec.92. Thus, notwithstanding that a Dominion company has capacity to hold land, it cannot refuse to obey the statutes of the Province as to Mortmain 16. Canadian Pacific Railway v. British Columbia, [1950) A.C. 122. 17. B.C. Power case, 47 D.L.R. (2d), at 681-707. 18. [1915) A.C. 330, at 342-43.

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(Colonial Building and lnv't Asn. v. Atty-Gen. of Que. (1883) 9 App Cas 157, at 164, 53 LJPC 27) ; or escape the payment of taxes, even though these may assume the forms of requiring, as the method of raising a revenue, a licence to trade which affects a Dominion company in common with other companies (Bank of Toronto v. Lambe). Again, such a company is subject to the powers of the province relating to property and civil rights under sec.92 for the regulation of contracts generally : Citizens Insur. Co. v. Parsons. A later statement is that of Lord Atkin in Lymburn v. Mayland (1932). 19 A Dominion company constituted with powers to carry on a particular business is subject to the competent legislation of the province as to that business and may find its special activities completely paralysed, as by legislation against drink traffic or by the laws as to holding land. If it is formed to trade in securities there appears no reason why it should not be subject to the competent laws of the province as to the business of all persons who trade in securities. As to the issue of capital there is no complete prohibition, as in the Manitoba case in 1929; and no reason to suppose that any honest company would have any difficulty in finding registered persons in the province through whom it could lawfully issue its capital. There is no material upon which their Lordships could find that the functions and activities of a company were sterilized or its status and essential capacities impaired in a substantial degree. Chief Justice Lett reached a twofold conclusion about the effect of the authorities which we must now examine carefully. He said: It seems to me that the gist of the authorities can be summed up by saying that: (1) If the provincial legislation does not relate to "company law", but to some matter over which the province has exclusive jurisdiction under one of the enumerated heads of sec. 92, then the legislation is intra vires notwithstanding that some dominion companies are thereby prevented from carrying on business; (2) If the provincial legislation is of the type that relates to "incorporation" of companies (i.e., is "company law") in the sense in which "incorporation" has been interpreted in the cases from John Deere Plow Co. v. Wharton on, then if the effect of such legislation is to prevent a dominion company from carrying on business within the province the legislation is ultra vires irrespective of whether or not the law is a law of general application. 20 It should be noted that the difference between Chief Justice Lett's first and second propositions depends on the application of the allpervasive aspect theory of constitutional interpretation. "Subjects which in one aspect and for one purpose fall within sect. 92, may in another aspect and for another purpose fall within sect. 91."21 In other 19. [1932] A.C. 318, at 324-25. 20. B.C. Power case, 47 D .L.R. (2d), at 684. 21. Hodge v. The Queen (1883-84), 9 A.C. 117, at 130.

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words, the challenged provincial legislation almost always exhibits several different characteristics or features, one or more being relevant to some provincial head of power and another or others being relevant to some federal head of power. In the process of interpretation the relative importance of these various aspects or features must be weighed and the most important aspect selected. The legislation is then characterized by this latter aspect, its "pith and substance," for purposes of assigning power to pass it under the B.N.A. Act. Looking again now at Chief Justice Lett's two propositions just quoted, we find that under each of them there is provincial legislation applicable by its terms to a dominion company or companies. But, in the first proposition the primary characteristic of the type of provincial legislation described is not company regulation but some other feature falling under a provincial head of power other than the power to regulate companies. The company regulation aspect is secondary. In the second proposition, the primary characteristic is the regulation of corporate bodies as such, that is, regulation the main feature of which is direct impact on the structure or functioning of corporate bodies as a type of legal person. More needs to be said at this point about the nature of the provincial power in this respect. The provincial power to regulate provincial corporations is plenary under s.92(11), "The Incorporation of Companies with Provincial Objects." Notice though that this does not account for the limited provincial power to apply some company regulation to dominion companies, which latter companies, by definition, have objects beyond provincial objects. This latter legislative capacity of the province must come from the general provincial power over "Property and Civil Rights" given by s.92(13) of the B.N.A. Act, which would seem naturally to embrace some power to deal generally with legal personality and legal persons of all types. So far as rights of action are concerned, in addition the general provincial powers over the administration of justice and civil procedure22 would seem to confer some general provincial power concerning all types of legal persons in this respect. Incorporation is just part of the picture so far as legal personality and status of persons are concerned, and the definitions and regulations of a legal system must extend to all aspects of legal personality. In any event, as the authorities have pointed out, provincial company legislation applicable to dominion companies is valid if compliance with it still leaves the dominion company free on reasonable 22. S.92(15) of the B.N.A. Act.

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terms to operate as a going concern in the province. But, if provincial company legislation strikes at the heart of the dominion company as a corporate legal person, or if it has that effect, it is invalid. Examples of both are well-known. In Lymburn v. Mayland 23 a provincial statute laid it down that company shares or securities could only be marketed in the province through a provincially registered broker or by a company that had itself qualified for registration. Registration was controlled by the attorney-general of the province and was a means of ensuring, by the conditions of registration, that the public was protected against fraud. This was held to be valid provincial company legislation applicable to dominion companies as well as others, since any honest company could find some registered broker through whom to market its shares when it wished to do so. On the other hand, in an earlier case,24 provincial legislation had prescribed that dominion companies (among others) could sell their shares in the province only after having supplied a provincial commissioner with all the information he asked for and having then obtained his consent. The provincial commissioner had the full discretion to withhold his consent if he did not like the look of things. This provincial statute was held ultra vires as striking fatally at the basic ability of a dominion company to raise capital in the normal corporate way. Accordingly, provincial legislation classifiable as company legislation in its primary aspect is ultra vires insofar as it impairs the essential status and powers of a dominion company as a corporate legal person. A dominion company cannot be put out of business by provincial company legislation. Here then is the basis of Chief Justice Lett's decision on the dominion company law point. He classified the British Columbia take-over legislation as primarily company law. He identified the provincial electric company with the dominion power corporation, as we have seen, which led to the conclusion that this was provincial company legislation directed at one particular dominion company, not even at dominion companies in general. The statutes purported simply to vest the ownership of the principal asset of the dominion company in the Crown Provincial for compensation in money, with management of the utility enterprises involved going to a new provincial public corporate body. Further, the evidence about the negative prospects for comparable private re-investment elsewhere led to the conclusion that the effect of the take-over legislation would 23. Supra note 19. 24. A.-G. for Manitoba v. A.-G. for Canada, [1929] A.C. 260.

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be to put the B.C. Power Corporation out of business and compel its demise by a winding-up. Hence the legislation was held ultra vires of the province, under Chief Justice Lett's second proposition quoted earlier. In the words of the Chief Justice: Referring to the 1961 Act and the amending Act, in my view this legislation is not legislation solely or entirely in relation to the "incorporation" of a company with provincial objects, using that word in the sense in which it is used in sec.92(11) of the British North America Act, 1867. The 1961 Act, particularly when sec.7 is read in conjunction with secs. 3(a) and (b), and sec. 9, must be considered as legislation directed at and primarily affecting the British Columbia Power Corpn., the plaintiff herein, and such legislation had the effect of sterilizing the plaintiff in all the functions and activities carried on by it in the province, thereby impairing in a substantial degree its status and essential capacities. In my view, the amending Act did not materially alter the effect of the 1961 Act in this respect. As I have indicated earlier in my analysis of the amending Act, I consider that it confirms my view that the legislation was primarily directed against the plaintiff, a dominion corporation, and was designed to interfere with the exercise of the powers conferred upon the plaintiff by a dominion statute. The legislation dealt with a matter which was not entrusted by sec. 92 to the province and is therefore ultra vires. 25

But, as has been indicated, this result depends very much on the niceties of the aspect theory with respect to one particular legislative scheme. As Chief Justice Lett's first proposition about dominion companies suggests, somewhat different provincial legislation might well have been valid, even though one of its effects would be to put the B.C. Power Corporation out of business. The point here is that if the provincial legislation has some broader or different primary aspect within s.92 than company law, then it is valid because of that primary aspect even though a secondary or incidental feature of the legislative scheme is to eliminate the business of a dominion company. Some examples may clarify this. Provincial prohibition legislation concerning alcoholic beverages is valid because it has the primary aspects of property and civil rights under s.92(13) and of local public order and morals under s.92(16) of the B.N.A. Act.26 To the extent that this puts dominion incorporated liquor dealers or distillers out of business, then they are indeed out of business by virtue of valid provincial legislation. Where provincial legislation permits the sale of alcoholic beverages at retail in the province only through provincial 25. B.C. Power case, 47 D.L.R. (2d), at 704-705. 26. A.-G. for Ontario v. A.-G. for the Dominion, [1896) A.C. 348.

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government stores, the provincial monopoly is valid and dominion incorporated retailers, along with others, are eliminated. It would seem that the same position obtains respecting provincial public welfare insurance schemes that are compulsory, all-embracing, and administered by a provincial government department or agency. These are valid under the property and civil rights clause. Examples are afforded by the automobile accident insurance scheme and the medicare scheme in Saskatchewan, and by similar plans elsewhere. These put private insurers out of business, except in a supplementary way, whether or not they are dominion corporations. The same point can be made about provincial marketing boards with a monopoly under provincial legislation of the marketing of an agricultural product internally in the province.27 Why was the British Columbia take-over legislation not dealt with in this broader way? Because the legislation, as drafted, was considered to be company law pure and simple and was not set in a wider context. As the Chief Justice put it: Whatever standard may be applied, I think it is clear that the legislation here under consideration cannot in any sense be said to be a law of general application, and I so find. It does not apply to all persons, nor to all companies dominion and provincial, nor to all persons or companies engaged in the business of the generation and distribution of power. Nor does the legislation relate generally to the business itself of the generation and transmission of power. In my view, it applies mainly to a single dominion corporation and relates primarily to the business and undertaking of that corporation.28

Moreover, there was on the statute book in British Columbia at this time the Power Act 29 which provided for expropriation by the Crown Provincial of any assets connected with the generation or supply of power in the province, these then to be developed or operated by the B.C. Power Commission, an arm of the provincial government. Compensation was to be paid as judicially determined. Here then was a general expropriation statute focused on the whole electrical generation and supply industry in the province. But the Government chose not to proceed under this statute. Instead it enacted special and particular legislation as explained earlier. Chief Justice Lett points out that this circumstance supports his conclusion that his narrow 27. Reference re the Farm Products Marketing Act, R.5.0. 1950, c.131, As Amended, [1957) S.C.R. 198. 28. B.C. Power case, 47 D.L.R. (2d), at 683. 29. R.S.B.C. 1960, c.293. B.C. Power case, 47 D.L.R. (2d), at 663-64.

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characterization of the take-over legislation as company law was justified. 30 His implication is that, had the general Power Act been used, or a statute like it, the result might well have been different. Accordingly, so far as the B.N.A. Act is concerned, it appears that appropriate legislation to do what they wanted to do was within reach of the British Columbia government. It seems that if the takeover legislation, itself, had manifested broader objectives related to the beneficial development of the generation and supply of electrical energy in the province, then it could have eliminated the private B.C. Power Corporation even though it was a dominion company. In principle, it seems to the present writer correct that this should be so. If one of the supreme democratic legislative bodies in a federal 30. See also: La Compagnie hydraulique de St. Franfois v. Continental Heat and Light Company, [1909) A.C. 194. In this case, "The appellants were incorporated by Quebec Statutes 2 Edw. 7, c.76 and 4 Edw. 7, c.84, and were granted the privilege of producing and selling electricity as power, heat, and light within a radius of thirty miles from the village of Disraeli, in Quebec. 5.3 of the later Act is set out in their Lordships' judgment. The respondents were incorporated under a Dominion Act, 60 & 61 Viet., c.72, ss.7 and 8 of which defined their powers, which included that of manufacturing, supplying, selling, and disposing of gas and electricity. 5.8 empowered them, with the consent of the municipal council or other authority having jurisdiction over any highway or public place, to enter thereon for the purpose of making the necessary constructions and suitable electrical contrivances. Both companies erected buildings and installed plant and machinery to produce and distribute electrical power within the said thirty miles radius" (194-95). The Quebec statute 4 Edw. VII, c.84 provided that "No company shall exercise any privileges, franchises, or rights of a like nature to those conferred upon the St. Francis Water Power Company . . . in the territory designated . .. without first obtaining the consent of the St. Francis Water Power Company . . .." The Continental Company proceeded without any such consent, and the St. Francis Company sought an injunction against the Continental Company. This was refused. Sir Arthur Wilson, for the Privy Council, quite clearly characterized the problem as one in company law pure and simple, and said " . . . where, as here, a given field of legislation is within the competence both of the Parliament of Canada and of the provincial legislature, and both have legislated, the enactment of the Dominion Parliament must prevail over that of the province if the two are in conflict, as they clearly are in the present case." Accordingly, the local monopoly clause in the charter of the provincial company was ineffective against the dominion company with appropriate dominion charter powers. Notice that there is no wider context of general provincial legislation about the control and development of electrical resources generally in the province. Here we had a simple contest between two private companies, the one relying on a federal charter and the other on a provincial one. Chief Justice Lett's reasoning explains and limits the St. Francis case, indeed the St. Francis case is more clearly one where company law was the primary aspect than is the B.C. Power case. The St. Francis case then is consistent with the reasoning of Chief Justice Lett and this essay, and does not contradict either.

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country decides that some sort of public monopoly is necessary in the public interest in a field of business or industry within the jurisdiction of that legislative body, then it should be able to institute these arrangements. There is nothing rationally inherent in the juridical notion of "incorporation" that should stand in the way. Nevertheless, there is indeed a serious gap in our constitutional law respecting the certainty of adequate compensation. There should be a straightforward constitutional guarantee, which no legislative body could disregard, of judicially determined compensation for a corporate body in the position in which the B.C. Power Corporation found itself. In any event, the skill and learning of the late Chief Justice Sherwood Lett, very ably assisted by counsel for all parties, has given us a reasoned constitutional judgment of great importance.

D. G. BLAIR

Combines: The Continuing Dilemma

IF THE TERM public law describes legislation which sets objective standards for Canadian economic and social behaviour, then our combines legislation represents one of the first and most pervasive examples. Canadian anti-combines policy dates from an act passed by the Parliament of Canada in 1889,1 one year before the famous Sherman Act of the United States Congress. The long history of the legislation can only be described as erratic. There was contradictory legislative experimentation and for considerable periods the law was quiescent because little or no enforcement was attempted. Until the early 1950s there was no consistent strength in administration which could provide a proper basis for assessing the effectiveness of the legislation and its consequences for the Canadian economy. 2 It is only comparatively recently that Canadian combines legislation has attained the respectability of academic enquiry. For most of the period the discussion has been, broadly speaking, political if not polemical. Books have been written, articles have appeared in the learned journals, and the legislation has been discussed sensibly and objectively in numerous forums created by business and other public organizations across the country. 3 This discussion has taken place against the background of the results of the consistent administration

1. 52 Viet. (1889), c.41. 2. The pattern of administration and enforcement had been established principally by Mr. F. A. MacGregor, registrar and later commissioner, Combines Investigation Act, in the late 1920s and the late 1930s. His activities were interrupted first by the Depression and then by the second world war and were severely hampered by lack of staff and financial support. 3. As examples, and where reference is made to much of the literature, see: R. Gosse, The Law of Competition in Canada (Toronto, 1962), 342-44 and L. A. Skeoch, Restrictive Trade Practices in Canada (Toronto : McClelland and Stewart, 1966), 347-54.

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of the law since 1950. It, also, to an increasing extent, reflects a developing consensus that anticombines administration and all other government activity in the economic field must serve the aims and purposes of national economic policy. The Government of Canada, in July 1966, announced that the Economic Council of Canada had been requested "in the light of the Government's long-term economic objectives, to study and advise regarding ... combines, mergers, monopolies and restraint of trade." 4 It has been generally recognized that Canadian combines law should be reappraised after a period of diligent and consistent enforcement. The time appears ripe for such a survey and it can be carried out with the benefit of the experience of other countries, many of which, since World War II, have initiated anticombines policies. These policies are no longer peculiar to North America and a considerable and diverse experience exists in Western Europe. The survey must take account of the continuing disagreementsometimes very emotionally expressed-which concerns both the aims and purposes of Canadian combines law and the legal forms and methods adopted in its administration. Any comment on the legislation has to recognize that the group to which it is primarily addressed, the business community of Canada, has, in varying degrees, opposed it throughout its history and remains skeptical of its usefulness. While total public acceptance of any law may never legitimately be expected, it is to be hoped that the survey by the Economic Council of Canada, in the broad context of Canadian economic policy, can lead to solutions which will set some ancient arguments at rest and lead to more fruitful administration of the legislation in the future. The purpose of this essay is not to anticipate the conclusions which may be reached by the Economic Council of Canada after its enquiry. Rather, it is to outline the present law and its history and to state or restate some of the issues requiring consideration. HISTORY

The history begins with an act "for the prevention and suppression of combinations formed in restraint of trade" passed by Parliament in 1889. 5 This statute enacted the core of the legislation, a prohibition against arrangements in restraint of trade, which, after many vicissi4. Press release, President of the Privy Council, Ottawa, July 22, 1966. 5. Supra note 1.

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tudes, is repeated substantially in the Combines Investigation Act. 6 It appears that one reason for the Act was the belief that the relatively high tariff structure established for the protection of Canadian industry in previous years had exposed the Canadian public to the danger of price fixing and other anticompetitive arrangements by Canadian businesses protected from the force of foreign competition. The phrase "the tariff is the mother of trusts" may appropriately describe the feeling in that far-off era. Not much use was made of the Act of 1889 which provided no machinery for administration or gathering the evidence necessary for successful prosecution. The Combines Investigation Act of 1910,7 introduced by Canada's first minister of labour, W. L. Mackenzie King, extended the scope of the legislation to cover harmful "mergers, trusts or monopolies" and attempted to provide a consistent method of administration. It originated two outstanding features of the legislation, enquiry and report, which have been retained to the present. Any group of six citizens, who reasonably believed the law was being violated, could apply to a superior court judge for an order directing the minister of labour to institute an enquiry. The report of the enquiry was to be published. It was considered that this would have a salutary effect in informing the public about Canadian business practices and deterring possible offenders. In the course of his address to the House of Commons, Mr. King made a distinction between "good" and "bad" combines which has been at the centre of all subsequent controversy. It was obviously his belief that the purpose of such enquiries would be to separate the "good" from the "bad" and to prevent, in his words, "branding as criminals" any group of businessmen joined together for commercial purposes.8 This legislation also remained substantially inoperative. There was no permanent agency established for its enforcement and no record exists of any enquiry having taken place under it. As a result of concern about hoarding, profiteering, and other harmful economic activities during and after the first world war, the Act of 1910 was repealed and replaced by the Board of Commerce 6. R.S.C. 1952, c.314, s.32(1) as amended by S.C. 1953-54, c.51; S.C. 1960, c.45i; S.C. 1960-61, c.42; S.C. 1962-63, c.4 (hereinafter cited as Combines Investigation Act). 7. S.C. 1910 c.9. 8. Canada, House of Commons Debates, 1909-10, at 6843. 9. S.C. 1919, c.37.

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Act9 and the Combines and Fair Prices Act10 of 1919. The Combines and Fair Prices Act defined combines in substantially the same form as the earlier legislation. The Board of Commerce was empowered to investigate such combines and was authorized to issue "cease and desist" orders against their operation. It was also authorized to regulate their operation by prohibiting hoarding, limiting profits to reasonable levels, and taking other steps to prevent price increases. This legislative experiment was the first expression of the duality of approach to combines. Previously, Parliament had only sought to "prohibit" the creation or operation of combines; under the 1919 legislation, it attempted to "regulate" their operation. The legislation was declared ultra vires of the Parliament of Canada by the Privy Council. 11 In 1923 Parliament enacted a new Combines Investigation Act12 which established a pattern of administration which continues to the present. The bill was piloted through the House of Commons by Mr. King, by then the prime minister, who again differentiated "good" from "bad" combines. 13 A permanent official, the registrar, was appointed with power to undertake enquiries into alleged combines on his own initiative or at the direction of the responsible minister or on the application of six citizens. Any report prepared by a commissioner appointed under the Act was required to be published. Thereafter, conviction and punishment would follow from a normal prosecution. The constitutionality of this legislation was upheld by the Privy Council as legislation in relation to criminal law.14 Because of limited financial support, only a few enquiries and prosecutions could be undertaken but they established a sound pattern for future administration.15 Another shift in policy and procedure occurred in the Depression when the Dominion Trade and Industry Commission Act 16 was enacted. The Depression had revealed other imperfections in the economy and notably the large spreads that appeared to exist between prices received by producers and prices paid by consumers. These differentials were accentuated by the economic power of large purchasers who appeared to be in a position to exact unreasonable dis10. S.C. 1919, c.45. 11. In re: The Board of Commerce Act and The Combines and Fair Prices Act, 1919 (1920), 60 5.C.R. 446, and [1922] 1 A.C. 191. 12. S.C. 1923, c.9. 13. Canada, House of Commons Debates, 1923, at 2520. 14. Proprietary Articles Trade Association v. Attorney-General of Canada, [1931] A.C. 310. 15. Supra note 2. 16. S.C. 1935, c.59.

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counts from producers. As a consequence, the Criminal Code was amended at the same time to prohibit the granting of discriminatory discounts and the practices of predatory price cutting designed to destroy competitors. 17 The effect of the Dominion Trade and Industry Commission Act was to transfer the administration of the Combines Investigation Act to a new commission. Its principal power was to review industry agreements and it was authorized, if it concluded that an industry agreement regulating prices and production was necessary to "prevent wasteful and demoralizing" competition, to recommend approval of such an agreement by the Governor in Council. It was also empowered to investigate complaints and recommend prosecution respecting "unfair trade practices" and, generally, to conduct enquiries into commercial practices in any industry to determine whether they were unfair or undesirable in the interests of the industry and of the general public. Both parts of the 1935 legislation were referred to the courts. The Criminal Code prohibition against discriminatory discounts and predatory price cutting was held to be intra vires 18 but the principal provisions of the Dominion Trade and Industry Commission Act were declared ultra vires. 19 Thus, for the second time the courts struck down attempts to "regulate" the operation of combines. In 1937 Parliament substantially re-enacted the Combines Investigation Act of 1923.20 There was some limited activity under the statute prior to the outbreak of war in 1939. During the war the anticombines administration was virtually suspended because the Canadian economy was subjected to the over-all control of prices and trade practices imposed by the Wartime Prices and Control Board. Active anticombines administration was resumed immediately after the war. It gave rise to much public discussion which was highlighted by the government's failure to publish the report on the flour-milling industry of 1949 on the disputed ground that it condemned an industry for practices which had been approved during the system of wartime control. The result of this discussion and the practical cessation of all wartime price controls was the appointment in 1950 of the 17. 5.498A of the Criminal Code added by S.C. 1935, c.56, s.9; now, as amended, Section 334 of the Combines Investigation Act. 18. Reference re Section 498A of the Criminal Code, [1936] S.C.R. 363. 19. Reference re Dominion Trade and Industry Commission Act, [1936] S.C.R. 379; Attorney-General for Ontario v. Attorney-General for Canada, [1937] A.C. 405. 20. S.C. 1937, c.23.

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MacQuarrie Committee to review the legislation and recommend such changes as would "make it a more effective instrument for the encouraging and safeguarding of our free economy ."21 The MacQuarrie Committee was pressed to recommend fundamental alterations in the law, particularly in respect of the description of illegal conspiracies which will be discussed later. The greatest significance of this report was its conclusion that the law, as it had been developed, should not be disturbed and its recommendations were specifically directed at the improvement of the administration of the law. In addition, it recommended the prohibition of the practice of resale price maintenance. The legislation was amended to incorporate the recommendations of the MacQuarrie Committee in 1952. 22 Other substantial amendments were made in 1960.23 The result of this long history of legislative experimentation has been the development of the present Combines Investigation Act. The previous overlapping provisions in the Criminal Code and the Combines Investigation Act have been consolidated in one statute. The result is a code prohibiting specific anticompetitive business practices and providing the structure for administration and enforcement. DESCRIPTION OF PRESENT LAW

1. "Combines" Prohibited The statute makes it an offence: "to prevent, or lessen, unduly,

competition in the production, manufacture, purchase, barter, sale, storage, rental, transportation or supply of an article, or in the price of insurance upon persons or property." 24 (Italics added) This paragraph defines a combine in the classic sense of an agreement among suppliers of goods covering a substantial part of the market having the effect of fixing prices, limiting production, or preventing others from engaging in a business. Sometimes such arrangements are called "horizontal" agreements and they have been the main concern of combines administration in Canada. The description of combines which are illegal under this section has 21. Report of the Committee to Study Combines Legislation (Ottawa, 1952), 5. This committee is better known as the MacQuarrie Committee after its chairman, the Honourable Mr. Justice J. H. MacQuarrie of the Supreme Court of Nova Scotia. 22. The amendments were incorporated in the revised statutes as R.S.C. 1952, c.314. 23. S.C. 1960, c.45. 24. Combines Investigation Act, supra note 6, s.32(1).

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provided the main legal and political battleground for those holding opposing views on the effect and purpose of the legislation. The legislation prohibits only those combines which "unduly" lessen competition. From the beginning the courts have been faced with the defence in combines prosecutions that this word should be given a qualitative interpretation. In the simple language employed by Mr. King, it should provide a means of distinguishing "good" from "bad" combines. It has been argued that if the conditions imposed on a trade are "reasonable," a combine should not be regarded as illegal. For example, it has been contended frequently that a combine is not detrimental to the public interest if it stabilizes prices and production in an industry and does not result in exorbitant prices to consumers. The courts have rejected such defences and have chosen rather to place a quantitative25 interpretation on the word "unduly."26 If the object or effect of an arrangement is such as to prevent or lessen competition over a substantial area of a trade or industry, the courts have uniformly held that such a combine is illegal. Parliament has upheld this interpretation by refusing, thus far, to alter the definition of a combine. The settled doctrine is best expressed by Duff C.J. in the Container Materials 21 case as follows: The enactment before us, I have no doubt, was passed for the protection of the specific public interest in free competition. That, in effect, I think, is the view expressed in Weidman v. Shragge 28 in the judgments of the learned Chief Justice, of Mr. Justice Idington and Mr. Justice Anglin, as well as by myself. This protection is afforded by stamping with illegality agreements which, when carried into effect, prevent or lessen competition unduly and making such agreements punishable offences; and, as the enactment is aimed at protecting the public interest in free competition, it is from that point of view that the question must be considered whether or not the prevention or lessening agreed upon will be undue [italics added]. Speaking broadly, the legislation is aimed at protecting the public interest in free competition. 25. In the cases thus far presented to the courts the combinations have ranged from those which effectively stifled all competition in the market (whether local or national) to those which affected little more than fifty per cent of the market. See: D. H. W. Henry, Q.C. (Director, Investigation and Research, Combines Investigation Act), Unfair Distribution and Pricing Practices, special lectures of the Law Society of Upper Canada, 1963 (Toronto : Deboo, 1963), 17. 26. While the courts have given primary consideration to the quantitative effect of the combination on the market, they are not likely to ignore the nature, manner, or degree of the acts of the participants in forming and operating an illegal combination. See R. v. Elliott (1905), 9 0.L.R. 648 per Osler J.A. at 662. 27. R. v. Container Materials Ltd. (1942] S.C.R. 147, at 152. 28. (1912), 46 S.C.R. 1.

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Although the horizontal combination is the most typical "combines" offence and has been frequently considered by the courts, it still presents some areas of dispute and uncertainty in application. In all reported convictions, competition was suppressed or intended to be suppressed over a substantial part-always well over fifty per cent-of the market, whether local or national, affected by the combine. The courts have never attempted to specify precisely the extent to which competition must be suppressed, but in recent years the problem has been discussed in some leading judgments. Cartwright J. in Howard Smith Paper Mills et al. v. The Queen 29 suggested that competition had to be virtually stifled. Although, obiter, this statement has been frequently referred to by defence counsel in subsequent cases and while it does not appear likely that the courts will require proof that the aim of a combination is the complete destruction or extinction of competition, the issue is not completely settled. In a recent case,30 Batshaw J. said: It cannot be accepted as our law that only those conspiracies are illegal

that completely eliminate or virtually eliminate all competition. To say that the prevention or lessening of competition must be carried to the point where there remains no competition, or virtually none, is tantamount to considering the words "prevent" or "lessen" as synonymous with "extinguish." Giving the words their ordinary meaning, it would seem that what the legislator intended by "prevent" or "lessen" is something less than "extinguish."

There remains the problem of defining competition and ascertaining the market in which it is deemed to be suppressed. The view of the courts to date has been that price is the main determinant of competition and that the market is that actually occupied by the product under review. Once price competition has been found to be interfered with, the courts have had little hesitancy in convicting. They have, until now, rejected the defence that competition continued either in the form of substitute products or in terms of freedom of 29. (1957] S.C.R. 403, at 426. 30. R. v. Abitibi Power and Paper Company Limited et al. (1961), 131 C.C.C. 201, at 251. See also R. v. Northern Electric Company Limited O.R. 431, per McRuer C.J.H.C. at 440. R. v. Electrical Contractors Association of Ontario and Dent, (1961] O.R. 265. The test of Cartwright J. has been applied in merger cases, see McRuer C.J.H.C. in R. v. Canadian Breweries Ltd. (1960] O .R. 601 and Williams C.J.Q.B. in R. v. British Columbia Sugar Refinery Company Limited et al. (1960), 32 W.W.R. (N.S.) 577 and was recently applied in a combination case, R. v. Beamish Construction Co. Ltd. (1966] 2 O.R. 867. The Exchequer Court of Canada, per Gibson J., in its first written decision under the Combines Act has restricted the application of Cartwright's dictum; R. v. Canadian Coat and Apron Supply Ltd. et al. (March 9, 1967, unreported).

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entry of new competitors. 31 It seems reasonable to expect that the Restrictive Trade Practices Commission and the courts will be urged to give further consideration to the definition of both competition and the market to which it applies. They, obviously, will be hesitant to find that the suppression of price competition in the sale of one commodity is justified and answered by the "workable competition" available from the sale of substitutes or the possible entry of new firms into the trade. The legal requirement is that there must be "agreement" between competing firms in order to constitute an illegal combine. The jurisprudence establishes that this may be shown either by proof of an express agreement or by inference from the course of conduct of the parties. 32 There must be proof of collusion, of actual or tacit agreement, and it is here that economists feel that the law may fall short. In a market where there are a small number of firms and particularly one which is dominated by one or a few big firms, prices and other conditions of sale are likely to be uniform. There may be identical behaviour, which is characterized as "price leadership" or "conscious parallelism of action," without any element of express collusion or agreement. In a recent case, the Restrictive Trade Practices Commission inferred an agreement from a "price leadership" situation and a subsequent prosecution was successful. 33 31. R. v. Northern Electric Company Limited, [1955] O.R. 431, per McRuer C.J.H.C. at 438 on the competition of "substitutes"; R. v. Howard Smith Paper Mills et al., [1954] O.R. 543, per Spence J. at 576 ff. on "poised competition." See also: R. v. Eddy Match Co. 109 C.C.C. 1, per Casey J. at 18; Restrictive Trade Practices Commission Report concerning the Distribution and Sale of Rockgas (Distribution of Propane in B.C.) (Ottawa: Queen's Printer, 1965); and their Report concerning the sale of pencils and related products in Canada, alleged combination (Ottawa: Queen's Printer, 1964) where substitutes are discussed and discarded as factors in providing competition. The courts, while admitting that there may be different types of competition have consistently emphasized that competition within the Act must include genuine and active price competition; see : R. v. McGavin Bakeries Ltd. et al. No. 6 (1951), 3 W.W.R. (N.S.) 28; R . v. Container Materials Ltd. et al. (1941), 76 C.C.C. 18 (Ont. C.A.). In R. v. Northern Electric Company Ltd. et al. [1955], O.R. 431 the court rejected a careful defence argument based on the theories of Joseph Schumpeter and others that the competition which matters is from new commodities, new technology, new sources of supply, and new methods of organization, sometimes called "workable competition." Note : Hereafter all R.P.T.C. reports will be cited by abbreviated title, e.g., R.P.T.C., Pencils Report, 1964. 32. See R. v. Northern Electric Company, supra note 31. 33. See R.P.T.C., Pencils Report, supra note 31. In the pencil industry there was uniformity in prices and terms of sale set by a price leader. The commission considered that the action of the price leader in informing his competitors of a proposed change in prices together with an indication from them that they

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The amendment of 1960 endeavoured to answer the longtime plea of business for a statutory code of practices which were not prohibited. Certain practices, including the exchange of statistics, the definition of product standards, co-operation in research and development, and restrictions on advertising, are declared not in themselves to constitute illegal arrangements under the Combines Investigation Act. 34 This amendment appears to have made no substantial change in the law but it may have been helpful in differentiating activities which are not prima fade unlawful. More difficulty has been created by the attempt in 1960 to specify under what conditions Canadian firms could enter into combinations for export purposes. Arrangements between exporters are permissible only if they do not reduce or limit the volume of exports, do not injure the export business of a competitor who is not a party to the arrangement, do not restrict entry into the business of exporting the commodity, and do not lessen competition unduly in the sale or distribution of the article in the domestic market. 35 Although the director of investigation and research and his staff have encouraged full discussion of proposed export schemes with the obvious purpose of giving the fullest possible effect to this provision, exporters generally have found it difficult to meet the conditions of the statute. The proper assessment of the effect, if any, of combines policy on Canadian export trade would appear to be an important concern of the inquiry of the Economic Council of Canada. It involves not only the question of whether and to what extent it might be helpful to the domestic economy to relax anti-combines restrictions in favour of exporters but also whether such exceptions might interfere with our international trading relationships and invite reprisals. would follow his lead was an illegal agreement under the Combines Investigation Act. In a subsequent prosecution the parties pleaded guilty (Supreme Court of Ontario, 1966, unreported). This appears to give legal recognition to a fundamental assumption of oligopolistic competition that each party acts similarly with the knowledge that others would so act in their mutual interest and to this extent closes the gap between the economic reality and the legal proof of oligopoly. 34. Combines Investigation Act, supra note 6, s.32(2) and (3). 35. Ibid., s.32(4) and (5); See Batshaw J. in R. v. Abitibi Power and Paper Company et al. (1961), 131 C.C.C. 201 at 256-57, for a discussion of the relation between export and domestic prices and H. E. English, "Competition and Policy to Control Restriction Practices" in Canadian Economic Policy, T. N. Brewis, ed. (Toronto: Macmillan, 1961), 63, as to the difficulty of fixing export prices which will not affect domestic prices.

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2. Monopolies Restrained

The Act makes it an offence to engage in the formation or operation of a monopoly. 36 Monopoly is defined as a situation where a business is substantially or completely controlled and is operated or likely to be operated to the detriment or against the interest of the public.37 Few monopoly situations have been investigated. In one case the courts had no difficulty convicting the monopolist because of the rapacious practices which had been employed to establish the monopoly and to prevent the entry of competing firms after its establishment.38 That the concern is with the quality of the act and the performance of the monopoly is illustrated by a subsequent report of the Restrictive Trade Practices Commission where the Commission did not condemn the monopoly as such but recommended the relaxation of certain selling and other trade practices which were deemed detrimental to the public interest. 39 3. Mergers Restrained

The Act also prohibits the formation or operation of a "merger."40 The Act defines a merger as a consolidation by any number of devices "whereby competition is or is likely to be lessened to the detriment or against the interest of the public."41 Only three merger cases have come before the courts and in all of them the courts have concentrated on "structure" rather than "performance."42 In the two 36. Combines Investigation Act, supra note 6, s.36. 37. Ibid., s.2(b) . 38. R. v. Eddy Match Company (1952), 13 C.R. 217 (trial); (1954), 18 C.R. 357 109 C.C.C. 1 (Quebec C.A.). 39. R.P.T.C., Ammunition Report, 1959. The commission found that the monopoly position enjoyed by one company in the manufacture and sale of sporting shells was due to economies of scale and tariff protection which made it possible for only one manufacturer to supply the Canadian market. It found that the company had a special responsibility not to follow a restrictive distribution policy which would have constituted an abuse of its monopoly position. R.P.T.C., Sudbury Star Report, 1963, also illustrates the emphasis on the behaviour of the monopolist rather than the phenomenon of monopoly as such. The commission concluded that there had been no abuse of the monopolist's position and that the monopoly had not operated to the detriment of the public. Contrast R.P.T.C., Rockgas Report, 1965, where the report had been adverse because the monopolist had put pressure on a supplier of propane to deprive a competitor of supplies. 40. Combines Investigation Act, supra note 6, s.33. 41. Ibid., s. (e). 42. R. v. Staples [1940] 4 D.L.R. 699; R. v. Canadian Breweries Ltd. (1960), 33 C.R. 1 and R. v. B.C. Sugar Refinery Co. Ltd. et al., 129 C.C.C. 7; (1960), 32 W.W.R. 577.

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most recent cases the courts held that a merger must approach the dimensions of a monopoly in order to contravene the Act and, having found that some competition was provided from outside the merged organizations, acquitted the parties charged. These decisions are much debated. On one side, business is concerned about the automatic proscription of substantial mergers. On the other, economists of distinction deplore concentration on the mathematical niceties of market structure and market control and the lack of concern about the behaviour of the merger and its economic implications as a whole. 43 The law on mergers is not accepted as settled by the director of investigation and research who in his latest report does not agree that "in order to succeed in demonstrating a merger to be unlawful, the Crown must show that the merger has resulted in a virtual monopoly in the industry concerned." 44 In this report, the director lists a number of factors taken into account in appraising any proposed merger, which emphasize performance and operation as opposed to structure. 45 The report also indicates that a research enquiry on mergers in the postwar period, 1945-1961, is in progress and that the results of this enquiry will assist "in formulating any future policy with respect to mergers." 46 It seems reasonable to expect that the decisions of the trial courts in the two postwar merger cases, which were never appealed, may be tested in future proceedings when it is to be hoped that the legal result will accord more appropriately with the actual economic situation resulting from mergers. 4. Resale Price Maintenance Forbidden

A supplier of goods may not prescribe the prices at or above which the goods are to be resold by his trade customers. 47 A recent attempt to attack the constitutional validity of this section was rejected by the 43. Irving Brecher, "Combines and Competition: A Reappraisal of Canadian Public Policy" (1960), 38 Can. Bar Rev. 523; W. G. Phillips, "Canadian Combines Policy and The Matter of Mergers" (1964), 48 Can. Bar Rev. 78. See also, J. C. Weldon, "Consolidations in Canadian Industry, 1900-1948," in Skeoch, supra note 3, at 228 for a study of merger activity in Canadian industry. 44. Report of the Director of Investigation and Research, Combines Investigation Act, March 31, 1966 (Ottawa: Queen's Printer, 1966), at 19. 45. Ibid. 46. Ibid., at 70; a recent example of a "merger" report, R.P. T.C., Phosphorous Products and Sodium Chlorate Report, 1966, where the merger appears to approach a monopoly, but where the concern is with operation and not structure. 47. Combines Investigation Act, supra note 6, s.34.

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Supreme Court of Canada. 48 Some cases are now pending in which the limits of the section will be tested in the light of the amendment of 1960 which provided a defence to the charge if the action taken by a supplier was designed to meet the practice known as "loss-leader" selling. 49 In practice, the administration of this section has proven difficult because the cases have been based usually upon the dealings of a supplier with one of his trade customers rather than a general practice deduced from the supplier's dealings with many customers. In such circumstances, it has been difficult to meet the rigorous standard of criminal proof in showing that prices have been dictated by the supplier and have not been established for any number of other commercial considerations. It must be assumed, however, if only because of the concerted criticism of this section, that it is effective in the practical sense in prohibiting the practice of resale price maintenance. It also appears that the prohibition extends only to the situation where the supplier of goods actually sells them to the retail distributor who in turn resells them to the public. There is room for evasion, which surely was not intended by Parliament when the provision was enacted, if the supplier places the goods in the retailer's hands under any arrangement whereby title has not passed to the retailer, whether by consignment or otherwise. There is evidence that this practice has become common in certain fields and it appears to call for correction by appropriate amendment as recommended by a recent report of the Restrictive Trade Practices Commission. 50 S. Regulation of Trade Practices

Two different types of harmful trade practices are prohibited by Section 33A of the Act, which reproduces with some amendments Section 498A of the Criminal Code enacted in 1935. The section, first, prohibits a seller of goods from making a practice of discrimination by offering a discount or other type of price concession to a purchaser which is not available to other purchasers buying similar qualities and 48. R. v. Cooper Campbell (1964), 2 O.R. 487 (Ont. C.A.). Appeal dismissed without reasons by Supreme Court of Canada, 1966. 49. Combines Investigation Act, supra note 6, s.34(5). In one case the defence was rejected: R. v. Sunbeam Corporation (Canada) Ltd. (1967), 1 O.R. 23; and in another the defence was accepted: R. v. William E. Coutts Company Limited (Supreme Court of Ontario, October 17, 1966, unreported) . SO. R.P.T.C., Report on North Star and Shell Gasoline Consignment Plans, 1966. The problem is also discussed in R.P. T.C., Report on the Sale of Tires, Batteries and Accessories, 1962.

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quantities of the goods. Secondly, it prohibits the selling of goods at prices which are unreasonably low or which are lower than those charged by the supplier in other areas of Canada if the supplier is engaged in a policy which has the effect or tendency of lessening competition or eliminating a competitor. Both of these provisions have received little exposition in reports of the Restrictive Trade Practices Commission and less from the courts. 61 Nonetheless, the prohibition against price discrimination, in particular, is one which exercises a considerable influence, in fact, on business practices. Those who are called upon professionally to advise on problems relating to combines legislation are impressed by the importance attached to it by the business community. It is probably equally true to say that the prohibition against predatory pricing has at least eliminated grosser attempts by large organizations to pre-empt a market or to drive competitors out of business. Both of these provisions suffer from undue rigidity. The judicial decisions on predatory pricing seem to indicate that the harm to smaller businesses which the section seeks to prevent must almost be done before a prosecution can succeed. Since the prohibition against price discrimination extends only to the conditions of sale of similar quantities of goods, it can be avoided if only a slightly larger quantity is sold to a favoured customer at any discount which might be agreed to. In the United States, this result is prevented by the existence of the Robinson Patman Act which requires that the discount offered in relation to particular quantities sold must bear some reasonable relationship to the economies created by volume sales. In addition, as is the case in connection with resale price maintenance, the section can be evaded if goods are not sold to a retail dealer but are placed in his hands by consignment or other arrangement which does not result in a passing of title to him. Allied with these provisions is a more recently enacted section which requires that any allowance by way of discount, rebate, or price concession offered for advertising or display purposes must be 51. The only report on discriminatory pricing is R.P.T.C., Retail Hardware Dealers, North Bay, Report, 1953, from which no prosecution resulted. Predatory pricing has been the subject of two recent reports, R.P.T.C., Report on Evaporated Milk (Carnation Milk), 1962, and R.P.T.C., Report on Ottawa Milk (The Producers Dairy), 1964. A prosecution against Carnation Milk was dismissed by the Supreme Court of Alberta in 1966 and a prosecution against The Producers Dairy Limited was dismissed by the magistrate whose decision was upheld by Ontario Court of Appeal in 1966. (Both decisions unreported.)

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offered on a proportionate basis to all the competing customers of the supplier. 62 This was intended to prevent evasion of the main provision by arrangements which had the appearance of the purchase of advertising or display space. It is uncertain, as yet, whether and to what extent it may have operated successfully. In 1960 a prohibition was also inserted in the Act against misleading representation as to price. 63 It was intended to strike at the practice of misrepresenting the savings available at so-called "sales" where the original or presale price of the article might be inflated by the retail dealer. There has been considerable enforcement activity and a number of convictions have been registered. The practice has grown of proceeding to prosecution in these cases without the elaborate process of enquiry used in other situations. 54 Since this is a summary conviction offence where a charge must be laid within six months after the offence was committed, it is virtually impossible to proceed with the usual enquiry and obtain a report from the Restrictive Trade Practices Commission before the limitation period expires. While the prohibition of price misrepresentation is important, it hardly appears to form part of a well-integrated code of combines law and appears to be an offence which could be administered by the ordinary law enforcement agencies or, perhaps better still, by a department of consumer affairs. ADMINISTRATION

The course of administration has been well set by the experience of the last fifteen years. One of the recommendations of the MacQuarrie Committee was the desirability of divorcing the administrative process, including the initial investigation of complaints, from the adjudicative process of preparing reports thereon. The basic administration of the statute and the investigation of complaints is under the charge 52. Combines Investigation Act, supra note 6, s.33B enacted by S.C. 1960, c.45. It formed the basis of some of the charges dismissed in R. v. Coutts, supra note 49. 53. Combines Investigation Act, supra note 6, s.33c. 54. See Report of the Director of Investigation and Research, Combines Investigation Act, March 31, 1965, at 10 for a statement of the considerations affecting the decision to proceed with a direct prosecution instead of first bringing the case before the Restrictive Trade Practices Commission for a report. Section 15 of the Combines Investigation Act empowers the director of investigation and research to remit any case at any stage to the attorney-general· of Canada and authorize the attorney-general of Canada to institute a prosecution.

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of the director of investigation and research who for many years was responsible to the minister of justice and more recently to the registrar general of Canada. Although the Act still provides for the initiation of investigations at the request of six citizens or by direction of the minister, practically all investigations are now initiated by the director, usually on the basis of formal or informal complaints which have been laid before him. The yearly reports of the director indicate that a substantial number of complaints are disposed of expeditiously as having no substance under the statute. 55 Where the complaint is of a more serious nature, the director has available a number of extensive powers to assist in his investigation. These include the right to seize documents and to summon representatives of the companies concerned to give explanations and evidence under oath in viva voce testimony which is taken before one member of the Restrictive Trade Practices Commission. 56 At all stages, it is open to the director to discontinue an enquiry,57 and the reports annually made to Parliament indicate that some enquiries are discontinued at an advanced stage when it is determined that sufficient grounds do not exist for proof of offences against the statute. If the enquiry is pursued to a conclusion, the director prepares a full summary of the evidence and the charges under the Act which he considers the evidence supports. This summary is delivered to the Restrictive Trade Practices Commission and also to all parties who are subject to the charges. The Commission then establishes hearings where the parties charged may bring forward evidence rebutting the charges and where argument can be made against the allegations of the director.58 After the hearing, the Restrictive Trade Practices Commission is required by the Act to make a written report which "shall review the evidence and material, appraise the effect on the public interest of arrangements and practices disclosed in the evidence and contain recommendations as to the application of remedies provided in this Act or other remedies." The minister, to whom the report is made, is required to publish it within thirty days after its receipt unless the 55. See : Annual Report of the Director of Investigation and Research, March 31, 1966, at 74 where the disposition of all complaints for the preceding ten years is set out in tabular form. The yearly number of complaints in this tenyear period varied from 48 to 239 and in 1965-1966 was 135. 56. Combines Investigation Act, supra note 6, ss.9-12 and s.17. 57. Ibid., s.14. 58. Ibid., s.18.

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Commission states in writing that it believes the public interest would be better served by withholding publication. 59 After the receipt of the report, it becomes the responsibility of the attorney-general of Canada to decide whether and what type of prosecution or other proceeding should be taken. Generally, he retains outside counsel for advice. Prosecutions are usually undertaken in the name of the attorney-general of Canada although it is open to the attornies-general of the provinces to prosecute under the statute. Offences related to combines, mergers, and monopolies must be tried in a superior court while the other offences can be the subject of summary proceedings in magistrates courts. 60 The traditional sanction is a fine, but considerable doubt exists whether such fines by themselves exercise any substantial deterrent effect and many regard them as mere licence fees. 61 Provision is made for imprisonment of up to two years for principals in any offences, but there is no known case of anyone having been imprisoned under the provisions of the Combines Investigation Act. As a result of the report of the MacQuarrie Committee in 1952, power was conferred on the court, in the event of conviction, to issue an order in the nature of an injunction prohibiting the continuation or repetition of the offence or, in the case of a conviction with respect to a merger or monopoly, directing the dissolution of the merger or monopoly. 62 The Supreme Court of Canada upheld the validity of the injunction prohibiting the repetition of a combine as an ordinary adjunct to the proper administration of the criminal law but expressly refrained from commenting on the power to dissolve a merger or monopoly. 63 The amendments made to the Act in 1960 extended the scope of the 59. Ibid., s.19. 60. Ibid., s. 40(1) and (2). 61. Rand J., in R. v. Goodyear Tire and Rubber Company, [1956] 5.C.R. 303, at 311 stated : "The procedure of enforcement by conviction and fine has tended to exhibit a course of things bearing a close likeness to periodic licensing of illegality." To the same effect vide: R. v. Dominion Steel and Coal Corporation et al., [1956] O.W.N. 753, per Judson J. at 754; R. v. Northern Electric Company Limited et al. (1956), 116 C.C.C. 98, per McRuer C.J.H.C. at 98. There is a recurring demand for more vigorous sanction such as imprisonment of corporate officers involved in the offence, see, e.g., Canada, House of Commons Debates, 1966 (unrevised), at 9580-87 (November 4, 1966) . The search for a more effective sanction has resulted in the injunction proceedings referred to infra. It seems that one of the most effective sanctions is the threat of adverse publicity following a report of the Restrictive Trade Practices Commission. 62. Combines Investigation Act, supra note 6, s.31(1). 63. Goodyear Tire and Rubber Co. v. R. (1956), 2 D .L.R. (2d) 11.

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injunctive power of the courts. It is now possible for the attorneygeneral to seek a prohibitory order where he believes that any person has done or is likely to do an act which constitutes an offence under the statute, including an order dissolving a merger or monopoly where the likelihood of such a merger or monopoly being created in contravention of the statute is demonstrated. 64 The 1960 amendments also conferred upon the Exchequer Court of Canada the power of a superior court of criminal jurisdiction to hear and dispose of charges under the Act, provided that those persons accused consented ·to proceedings in the Exchequer Court. There has been some limited and useful employment of these new powers and several prohibitory orders have been obtained from the Exchequer Court enjoining the commission of acts which have or might constitute offences under the Act.65 The constitutional validity of the power to issue what might be termed an anticipatory prohibitory injunction has never yet been subjected to judicial test but it would appear to be an incident of the power to enact and enforce criminal law. The task of investigating offences against the statute is laborious and time consuming. In any major enquiry, the director and his staff must consider multitudinous documents and employ exceptional skill to detect illegal practices which the parties may have taken particular pains to conceal or obscure. After the completion of an investigation, the preparation and the presentation of a proper summary of evidence to the Restrictive Trade Practices Commission takes considerable time as does the preparation of the Commission's report. The process of consultation with outside counsel and the launching of prosecutions in superior courts has proved, in most instances, to be one which cannot be quickly accomplished. The inevitable result is that a very long time usually passes between the initiation of an investigation and the final stage of prosecution. This is frequently extended in all major cases where appeals are taken to provincial appellate courts and not infrequently to the Supreme Court of Canada. The description of the lengthy process of investigation and disposal of cases gives rise to certain fundamental comments about the administration of the statute. The first point is the desirability of developing more flexible administrative and judicial processes, which will be referred to later, which would facilitate the early disposal of any but the most serious cases. It would appear that the initial 64. Combines Investigation Act, supra note 6, s.31(2). 65. Reasons have only been given in one case, R. v. Canadian Coat and Apron Supply Ltd. et al. (March 9, 1967, unreported).

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attempts made in the use of anticipatory prohibitory injunctions constitute a step in this direction. These orders, particularly where they are obtained with the consent of the accused, have some of the quality of the "consent decrees" issued pursuant to the Sherman Act of the United States. It seems possible that wider use of this power would enable the administration, in at least less serious cases, to dispose of them by preventing acts which would infringe the statute. Second, it appears to be the growing practice of the director to short-circuit the elaborate process of investigation and report by the Restrictive Trade Practices Commission in cases where there has been an obvious breach of the law. In some recent instances, the director has proceeded directly to prosecution at the conclusion of his investigation as he is permitted to do under Section 15 of the Act. 66 Third, the degree of support afforded for the administration by the government of Canada and Parliament is a significant consideration. The director's staff remains relatively small, consisting of only thirtytwo officers. 67 It is charged not only with the onerous duty of conducting initial investigations but also with the conduct of cases before the Restrictive Trade Practices Commission and the instruction of counsel in any cases which are taken to court. The strain imposed on this relatively small staff may be reflected, to some extent, in the time taken to complete investigations. It is perhaps reflected more in the selectivity which the director has to exercise in determining what cases shall be proceeded with and even more in the director's inability to call up for consideration industries and practices which are not made the subject of direct complaint to him. 68 Fourth, the parsimony affecting the operations of the director of investigation and research is reflected in the provision made for the operations of the Restrictive Trade Practices Commission. At present, the three members of the Commission are supported by a staff consisting of only one economist and three secretaries. In view of the voluminous and complicated evidence with which the Commission has to deal, it seems obvious that the provision of more expert staff to assist the Commission should be given a high priority. Fifth, more attention should be given to the special remedies provided in the Combines Administration Act. Under Section 29, the Governor in Council is empowered to remove tariff protection in 66. See supra note 54. 67. Report of the Director of Investigation and Research, March 31, 1966, 76. 68. See Rosenbluth and Thorburn, Canadian Anti-Combines Administration, 1952-1960 (Toronto: University of Toronto Press, 1963), 57 et seq., for a critique of activities under the Combines Investigation Act.

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whole or in part from any industry where it appears either as a result of an enquiry under the Act or as a decision of a superior court that an illegal conspiracy or combination or merger or monopoly has promoted "unduly the advantage of the manufacturers or dealers at the expense of the public." A parallel power is vested by Section 30 in the Exchequer Court to deprive parties of patent or trade mark protection where such protection has been demonstrated to result in an undue lessening of competition. The latter power has. never been exercised. While tariff protection has never been expressly withdrawn from any industry as a consequence of a Combines enquiry or prosecution, the results of the Eddy Match prosecution may have been one of the reasons why the government agreed to a reduction in the tariff on matches in one of the post World War II multilateral tariff negotiations. Sixth, the research function of the director of investigation and research has not been fully exploited. It is an important function because through it the administration should be able to form a better over-all assessment of Canadian industry and business and its implications for combines administration. There have been several important research enquiries on subjects including the practice of loss-leader selling, 69 discriminatory pricing practice in the grocery trade, 70 and the manufacture, sale, and distribution of drugs. 71 Mergers are now being studied as are also the service industries, including professional sports, not within the scope of the Act. The most recent report of the director emphasizes employment of more staff and resources in this important research function. 72 As an aid to his research and other functions, the director, in 1964, appointed a small academic advisory committee, one of whose particular functions is to advise on subjects for research. It will also serve to keep the administration informed of current academic thinking about "problems of business structure and performance, and effective means for the public control of restrictive practices." 73 Seventh, there is the much discussed problem of whether the Restrictive Trade Practices Commission has properly exercised its authority and responsibility. Some critics have alleged that the Commission has failed in the words of the statute to "appraise the 69. 70. 1958. 71. 72. 73.

R.P. T.C., Report on Loss Leader Selling, 1955. R.P.T.C., Report on Discriminatory Pricing Practices in the Grocery Trade, R.P.T.C., Report on the Manufacture, Distribution and Sale of Drugs, 1963. Supra note 67, at 71. Ibid., at 72 and 73.

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effect on the public interest of arrangements and practices disclosed."74 It has been said that the Commission has been too prone, once it is faced with evidence of an arrangement suppressing competition, to condemn it without giving proper consideration to the wider public interest which might be served by its continuance. 75 This charge does not appear to be entirely fair to the Commission. There have been instances where the Commission has been faced with an all-embracing combination suppressing competition or a monopoly when it has refrained from condemning the practices disclosed in their entirety and has rather made recommendations for the amendment of practices by the industry concerned or for legislation which would provide a proper framework for the continuance of such arrangements under public authority. 76 In addition, the above description of the director's administration will indicate that only the most significant cases are brought before the Commission where it may be assumed the public interest is likely to be prejudicially affected by the suppression of competition. FOREIGN LEGISLATION

It is impossible within the bounds of this essay to undertake any detailed comparative analysis of combines legislation in other countries. Some brief comments on the United States and United Kingdom legislation may, however, illustrate the effect of two different approaches to the problem of combines control. In the United States the Sherman Act, 77 which is the foundation of the so-called "anti-trust laws," makes it a criminal offence to enter into agreements or combinations in restraint of trade. In this respect it is similar to the "combines" provisions of the Canadian law. As an aid to enforcement, the United States federal courts are given equity jurisdiction to prevent and restrain violations of the Act and in addition, individuals injured in their business by conduct forbidden by the Act may recover treble damages. 74. Combines Investigation Act, supra note 6, s.19(1) . 75. V. W. Bladen and 5. Stykolt, "Combines Policy and The Public Interest: An Economist's Evaluation',. in W. Friedmann, Anti-Trust Laws (Toronto : Carswell, 1956) and W. Friedmann, "Monopoly, Reasonableness and Public Interest in Canadian Anti-Combine Law" (1955), 33 Can. Bar Rev. 133. 76. R.P. T.C., Ammunition Report, where modifications recommended, and R.P.T.C., Report on Shipping from and to Eastern Canadian Ports, 1965, where regulatory legislation recommended. 77. All United States anti-trust statutes referred to in this section are collected in Anti-Trust Laws with Amendments, 1890-1962 (Washington: United States Government Printing Office).

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The power of the federal government of the United States is not based, as is the case in Canada, on narrow jurisdiction over criminal law but is more broadly founded upon the interstate commerce clause of the United States constitution. This has made it possible for the United States to round out its control of restrictive trade practices by ancillary legislation including the Federal Trade Commission Act of 1914, the Clayton Act of 1914, and the Robinson Patman Act of 1936. These statutes, taken together with the Sherman Act, provide the United States administration with a broader range of power and a greater choice of sanctions than is at present the case in Canada and permit much greater flexibility in administration in striking more directly and expeditiously at objectionable trade practices. In its essentials, however, the Sherman Act deals with horizontal combinations in restraint of trade on the same basis as the Combines Act. The ban upon price fixing arrangements and horizontal agreements in restraint of trade has been pretty generally accepted by the American business community and no longer is a cause of great public debate. While the basic approach of the United States laws is similar to that of Canada, namely, the outright prohibition of combines broadly described, the approach in the United Kingdom has been different. Until the Monopolies and Restrictive Practices (Enquiry and Control) Act of 1948 was passed,78 there was no prohibition against or control of combinations in restraint of trade in the United Kingdom. It is common knowledge that, at that time, almost every major industry in the United Kingdom was regulated by private agreements between competing firms. It was then considered-and not without good reason-that the existence of these arrangements might have the effect of penalizing efficiency, limiting innovation, and otherwise harming the interest of the economy of the United Kingdom. The first approach was purely empirical, one which has not infrequently been recommended by industry in Canada. The Monopolies and Restrictive Practices Commission was authorized, under direction by the Board of Trade, to investigate particular industries to determine whether monopolistic or restrictive practices existed and whether any action was required to terminate or limit their operation. The Board of Trade was empowered to make appropriate orders. This empirical case-by-case approach to the problem of combines control quickly raised serious problems in the United Kingdom, not the least of which was the obvious unfairness of singling out a few 78. 11 and 12 Geo. VI, c.66.

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industries from many for investigation and possible control. It also led quickly to uncertainty as to what practices might be legal. It further invited close governmental regulation and control of those industries which had been made the subject of adverse reports. In addition, the prevalence of restrictive arrangements and the uniformly adverse comments made on them by the tribunal resulted in a general reference by the Board of Trade to the Commission for an enquiry into a wide range of restrictive practices and their operation in British industry. This resulted in a report which condemned such common restrictive practices as price fixing agreements and market sharing arrangements. 79 The Commission recommended legislation which would generalize the prohibition against restrictive agreements and after much discussion the Restrictive Trade Practices Act (1956) 80 was passed. This statute does not prohibit restrictive agreements but requires that such agreements affecting any industry or trade must be filed with the registrar appointed under the statute. The objectionable restrictions specified in the Act include those affecting prices, manufacture, and distribution of goods. 81 All registered agreements fall under the jurisdiction of the Restrictive Practices Court established by the Act. Registered agreements do not by virtue of registration become lawful or unlawful. They are referred to the Court according to priorities established by the registrar. When any agreement is referred to the Court, there is a rebuttable presumption that the restrictions are inconsistent with the public interest. The special court consists of three judges from the High Court of England, one judge from the equivalent courts of Scotland and Northern Ireland, and not more than ten laymen qualified by their knowledge of or experience in industry, commerce, or 79. Monopolies and Restrictive Practices Commission, Report on Collective Discrimination cmnd. 9504 (1955). 80. 4 and 5 Eliz. II, c. 68. 81. Ibid. "6(1) •.• this Part of this Act applies to any agreement between two or more persons carrying on business within the United Kingdom in the production or supply of goods, or in the application to goods of any process of manufacture, whether with or without other parties, being an agreement under which restrictions are accepted by two or more parties in respect of the following matters, that is to say: (a) the prices to be charged, quoted or paid for goods supplied, offered or acquired, or for the application of any process of manufacture to goods; (b) the terms or conditions on or subject to which goods are to be supplied or acquired or any such process is to be applied to goods; (c) the quantities or descriptions of goods to be produced, supplied or acquired; (d) the processes of manufacture to be applied to any goods or the quantities or descriptions of goods to which any such process is to be applied; or (e) the persons or classes of persons to, for or from whom, or the areas or places in or from which, goods are to be supplied or acquired, or any such process applied."

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public affairs. Ordinarily hearings are conducted before a panel consisting of one judge and two lay members. The judge alone is empowered to decide questions of law but all other matters are decided by a majority of the panel. In proceedings before the Court, the parties to the agreement must overcome the rebuttable presumption established by statute. To do so, they must establish first that the restrictions are reasonably necessary to serve one of seven useful purposes specified in the statute, and having done so must further establish that when the benefits are set against the detrimental effects of the restriction, it is not, on balance, unreasonable.82 While the United Kingdom has moved some distance towards the North American concept of a generalized proscription against restrictive practices, it has certainly not come the whole way. It is perhaps too early to attempt any over-all assessment of this relatively new legislation. Already certain broad problems are emerging. The principal one is the "justiciability" of the issues with which the court must deal. Is it possible for a court effectively to make binding legal decisions in matters which involve a large element of economic 82. Ibid. "21(1) For the purposes of any proceedings before the Court under the last foregoing section, a restriction accepted in pursuance of any agreement shall be deemed to be contrary to the public interest unless the Court is satisfied of any one or more of the following circumstances, that is to say : (a) that the restriction is reasonably necessary, having regard to the character of the goods to which it applies, to protect the public against injury (whether to persons or to premises) in connection with the consumption, installation or use of those goods; (b) that the removal of the restriction would deny to the public as purchasers, consumers or users of any goods other specific and substantial benefits or advantages enjoyed or likely to be enjoyed by them as such, whether by virtue of the restriction itself or of any arrangements or operations resulting therefrom; (c) that the restriction is reasonably necessary to counteract measures taken by any one person not party to the agreement with a view to preventing or restricting competition in or in relation to the trade or business in which the persons party thereto are engaged ; (d) that the restriction is reasonably necessary to enable the persons party to the agreement to negotiate fair terms for the supply of goods to, or the acquisition of goods from, any one person not party thereto who controls a preponderant part of the trade or business of acquiring or supplying such goods, or for the supply of goods to any person not party to the agreement and not carrying on such a trade or business who, either alone or in combination with any other such person, controls a preponderant part of the market for such goods; (e) that, having regard to the conditions actually obtaining or reasonably foreseen at the time of the application, the removal of the restriction would be likely to have a serious and persistent adverse effect on the general level of unemployment in an area, or in areas taken together, in which a substantial proportion of the trade or industry to which the agreement relates is situated; (f) that, having regard to the conditions actually obtaining or reasonably foreseen at the time of the application, the removal of the restriction would be likely to cause a reduction in the volume or earnings of the export business which is substantial either in relation to the whole export business of

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analysis, hypothesis, and prediction? 83 The continuance of the caseby-case approach also invites, if not discrimination, at least the feeling of discrimination. Some industries are reviewed and some are not. Some are chosen for early review and others for later review. There has been a variable quality in the decisions of the court which must reflect the different viewpoints of the presiding judges and other members. The validation of any agreement carries with it the severe implication of future regulation and control, which is not provided for in the legislation. In a famous decision, the United States Supreme Court commented upon the danger of a court being drawn into this area of economic policy when it said "the reasonable price fixed today may through economic and business change become the unreasonable price of tomorrow." 84 The lesson of the United Kingdom's experience is obvious. The adoption of an empirical, case-by-case method of combines control as opposed to outright prohibition offers no panacea. 85 The following the United Kingdom or in relation to the whole business (including export business) of the said trade or industry; or (g) that the restriction is reasonably required for purposes connected with the maintenance of any other restriction accepted by the parties, whether under the same agreement or under any other agreement between them, being a restriction which is found by the Court not to be contrary to the public interest upon grounds other than those specified in this paragraph, or has been so found in previous proceedings before the Court, and is further satisfied (in any such case) that the restriction is not unreasonable having regard to the balance between those circumstances and any detriment to the public or to persons not parties to the agreement (being purchasers, consumers or users of goods produced or sold by such parties, or persons engaged or seeking to become engaged in the trade or business of selling such goods· or of producing or selling similar goods) resulting or likely to result from the operation of the restriction." The seven grounds for justification are popularly known as the "gateways" and the final balancing test is known as the "tail piece." 83. R. B. Stevens and B. 5 . Yamey, The Restrictive Practices Court-The Judicial Process and Economic Policy (London: Wiedenfeld and Nicholson, 1964), question whether such issues are justiciable but to contrary, see book review (1966), 82 L.Q.R. 550; see also, R. Stevens, "Justiciability: The Restrictive Practices Court Re-Examined,"' 1964 Public Law (Autumn) 221, at 238 and 253. 84. United States v. Trenton Potteries (1927), 273 U.S. 392 at 397. 85. James P. Cairns, "Benefits from Restrictive Agreements: The British Experience" (1964), 30 C.J.E.P.S., 228, at 240 : "We may conclude by agreeing with one of the leading students of the British restrictive practices legislation that the 'British experience has not provided compelling reasons why a country which already has a per se rule should modify it.' [J. B. Heath, "The Per Se Rule in the Light of British Experience", Northwestern University Law Review, LVII, 171.] An empirical, case-by-case approach, even if operated perfectly, is not obviously superior to a per se approach that prohibits the good as well as the bad; an empirical approach, operated short of perfection, as it must be in the real world, is even less obviously preferable to per se.''

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comment on the United Kingdom experiment indicates there are sound reasons for believing that it presents a less acceptable solution to the problem than the North American approach: In many ways the Act, with its tentative and cautious view of competition, may appear to be more sophisticated than the American anti-trust legislation with its more doctrinaire view of the inevitable virtues or desirability of competition. But the American approach enjoys one significant advantage where the investigation of restrictive agreements is given to the courts; for the view that all collective restraints on competition are undesirable relieves the courts from concern with the appraisal of the economic effects of the agreement other than its impact on competition. An injury to competition is assumed to be harmful, and so unlawful. Thus in the main areas of anti-trust law, the courts are able to perform an essentially judicial function unencumbered by the need to consider the relative merits of rival economic theories or policies or the obligation to evaluate the effect of any particular decision on the interests of various groups. This view was restated on the behalf of the Supreme Court by Mr. Justice Brennan in a recent decision on section seven of the Clayton Act, which is concerned with mergers: "We are clear, however, that a merger the effect of which 'may be substantially to lessen competition' is not saved because, on some ultimate reckoning of social or economic debits and credits, it may be deemed beneficial. A value choice of such magnitude is beyond the ordinary limits of judicial competence, and in any event has been made for us already, by Congress when it enacted the amended Section 7. Congress determined to preserve our traditionally competitive economy. It therefore proscribed anticompetitive mergers, the benign and the malignant alike, fully aware, we must assume, that some price might have to be paid." (United States v . Philadelphia National Bank, 374 U.S. 321, 371 (1963)) Thus, in the United States, whatever may be the defects of the commitment to competition in the anti-trust laws, from the lawyers' point of view the relevant legislation has the basic advantage that it presents a clear justiciable issue. The British Act, on the other hand, in seeking to have both the advantages of a less dogmatic approach to the effects of competition and also the advantages of the judicial process, has failed to achieve the latter. 86

The difference in approach between the United Kingdom and the United States typifies the two fundamental approaches which have been adopted in other jurisdictions. The choice appears to lie between an outright prohibition of restrictive practices and some attempt to regularize them by individual review and analysis, followed in some cases by continuing control. INTERNATIONAL OPERATION OF ANTI-TRUST LAWS

No comment on United States anti-trust legislation can be complete without reference to its extra-territorial application. This has, as 86. Stevens and Yamey, supra note 83, at 139-40.

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several notable recent cases have illustrated, particular significance for Canada because of the large number of subsidiaries of American corporations carrying on business here. In 1952, the Du Pont Corporation was forced, as a result of American anti-trust proceedings, to divest itself of its half-share in Canadian Industries Limited, the other half being owned by a British corporation, Imperial Chemical Industries Ltd. 87 In 1958, a patent pool maintained by companies engaged in the manufacture of radio and television equipment in Canada was attacked by United States anti-trust proceedings. It was alleged that the American companies, whose Canadian subsidiaries were members of the pool, restrained the export trade of the United States by closing the Canadian markets to their competitors who were not members of the pool. 88 In 1959, an exclusive franchise arrangement for the sale of Canadian peat moss in the United States was attacked in American anti-trust proceedings. 89 These examples show that a continuing threat to the security of business arrangements in Canada, which are not contrary to the laws of this country, is posed by the wide international effect given to United States anti-trust laws by American courts. They raise not only problems of combines control but most serious issues in both public and private international law and affect the sovereignty of and political relations between independent countries. 90 The immediate solution of the difficulty caused by conflicting administration of the United States anti-trust laws and Canadian combines legislation was an arrangement between the two countries not to institute proceedings affecting each other without prior consultation.91 This understanding has prevented similar gross intrusions on Canadian sovereignty but has not eliminated entirely the threat of the disruption of Canadian commerce by the extra-territorial application of American anti-trust laws. On a broader international 87. U.S.A. v. Imperial Chemical Industries Ltd. et al. (1952-53), C.C.H. Trade Cases, 67282; 105 Fed. Supp. 215. 88. U.S.A., v. General Electric Company et al. (1962), C.C.H. Trade Cases, 70546; U.S.A. v. Westinghouse Electric Corporation et al. (1962), C.C.H. Trade Cases, 70428; U.S.A. v. N.V. Philips Gloelampenfabrieken et al. (1962), C.C.H. Trade Cases, 70342. The consent judgments obtained in these cases did not destroy the Canadian Radio Patent Pool. 89. United States of America v. Wilson and Geo. Meyer and Co. et al., civil complaint filed October 21, 1959, in the United States District Court for the Northern District of California, Southern Division. 90. For a discussion of these issues see Ivan R. Feltham, "Anti-Trust Law : The Canadian Radio Patents Case; The Peat Moss Case (1960), 1 U. British Columbia L. R., 340. 91. The Fulton-Rogers Arrangement, named after the then Canadian Minister of Justice and the attorney-general of the United States, is published in Canada, House of Commons Debates (1959), 617.

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front the Organization for Economic Co-operation and Development has initiated useful discussions on the harmonization of anti-combines and anti-trust laws of western countries. The difficult international problems created by the operations of these laws are far from settled and it appears obvious that Canada must encourage the development of international agreements, either of multilateral or bilateral character in this field. 92 EFFECTIVENESS OF THE LEGISLATION

The operation of the combines legislation is opposed with varying degrees of vehemence by different business interests affected by it. There is no corresponding enthusiasm for the legislation in other sections of the community unless it can be said that there is a general sentiment in Canada favouring competition as an ideal and a general distrust of intra-industry arrangements which might be entered into by competing businesses. There is indeed considerable cynicism as to the effectiveness of the legislation; a state of mind which it is difficult to overcome by overt evidence. There is, in fact, a great gap in economic scholarship in that no systematic analysis of the effectiveness of the legislation has been attempted in Canada. How much it has protected competition and at what benefit or cost to the nation are questions which have never been fully and dispassionately explored. These are issues which should engage the attention of the Economic Council of Canada in its present enquiry. Much of the comment on the operation of the legislation has proceeded on the basis of a priori assertions and judgment based on personal observation of particular circumstances. The generally accepted theoretical foundations of economics indicate that the control of combines should be beneficial but whether, in fact, this control has been effective and beneficial is not easy to demonstrate. It is perhaps easiest to assert that the legislation has been effective because it has been so violently criticized by the business community most affected by it. It has often been said of the United States antitrust legislation that it is the "unseen presence" in the corporate boardroom and this comment applies equally to Canadian law. It has and does impose restraint upon a variety of arrangements which 92. For a discussion of the desirability of co-operation with other nations to regulate international oligopoly and the problem of ensuring competitive behaviour by foreign owned subsidiaries operating in Canada, see Stephen Hymer, "Direct Foreign Investment and the National Economic Interest," in Peter Russell ed., Nationalism in Canada (Toronto, 1966) .

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otherwise would restrain competition. That it does not appear more effective is perhaps due to the fact that competition, in the terms envisaged by classical economists, is no longer possible-if indeed it ever was-in modern society. Nowhere in the legislation is the key word "competition" defined. The aim and purpose of the legislation must be considered to be to maintain that degree of competition which is possible and consistent with the structure of Canada's modern economy. To the extent that this falls short of the common understanding of competition-a situation involving many competitors offering continually fluctuating prices-there is bound to be disappointment and disillusionment even though such a situation has probably never existed in the practical world. It has to be recognized that competition is no longer the norm in many areas of Canadian life. Government-controlled enterprise operates in substantial areas of the economy. Transportation, communication, and other public utilities are removed from competitive influences and operate under the control of regulatory boards. The prices of many agricultural commodities are no longer fixed in the marketplace but are controlled by marketing boards. The wages of labour are no longer determined by the ancient prescriptions of the market and are now fixed generally by collective agreements which have pervasive influences throughout the economy. To an outsider, the Canadian economy must present a prospect far removed from the classical model of competition. To Canadian businessmen who are subjected to the rigours of the Combines Investigation Act, it must and does seem unfair to be singled out to obey the precepts of competition. Particularly is this so when these businessmen face all the ordinary hazards of business in an era when high taxation and the assumed constant threat of foreign competition appear to make them vulnerable. It is not improper to mention the expectations of the ordinary public and the fears of businessmen in a discussion of this legislation. But these have to be set in a wider context and the appraisal of the legislation itself must be judged against the national economic objectives of Canada described in the terms of reference of the Economic Council of Canada as : "full employment, a high rate of economic growth, reasonable stability of prices, a viable balance of payments and an equitable distribution of income." It is beyond the province of a lawyer to attempt a full discussion of all the serious questions of public and economic policy which bear on the future

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of Canada's combines legislation. All that can be attempted here is to raise some of the issues which ought to be considered. Under modern conditions, it may no longer be said that "competition" is a desirable end in itself. This may have been true in the era when classical economics held sway and when it was admitted by all to be the "balance wheel," the only regulator of economic life. It was assumed to be the driving force for economic development and, also, the protector of the consumer. Now it may be said that competition is something to be cherished and protected only if it serves the broad national goals of the economy. There are many who think that it does not. One school of economic thought holds that price competition is a substantial irrelevancy in the modern world. In an economy which generally speaking is dominated in each industry by a handful of large firms, it is claimed that price reductions are not likely to be made by any firm because of the massive retaliation they provoke and it is argued that agreements to stabilize prices would promote greater flexibility in the economy. This school emphasizes the concept of "workable competition" which is based upon the technological innovation which can only be brought about in a stabilized economy where large capital outlay for research and plant improvement is possible. The competition, which is effective, is that provided by new commodities and substitutes, new technology, new sources of supply, and new types of organization.93 This thesis has been strongly challenged by other economists. It was carefully examined by the United States attorney-general's committee appointed to review anti-trust legislation when it restricted the concept of workable competition to the more traditional elements of competition and affirmed the importance of price competition between competing products. 94 While it may be admitted that the modern economy has departed far from the classic model, this is not to say that competition should not be enforced to the degree possible. Moreover, it appears a long step to take to suggest that the danger of parallel price action arising from oligopoly should be replaced by the certainty of concerted price action arising from outright collusion. An argument directed more to the Canadian economy is that some degree of rationalization and specialization of its industries must be permitted if industrial growth is to be fostered and if different pro93. Friedmann, "Monopoly, Reasonableness and Public Interest in Canadian Anti-Combines Law (1955), 33 Can. Bar Rev. 133. 94. Attorney General's National Committee to Study the Anti-Trust Laws (Washington: U.S. Government Printing Office, 1955), 332.

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ducing units are to be put in a position where they can produce more efficiently and cheaply for the domestic market and have a greater opportunity to compete in export markets. The argument is frequently made that it is economically foolish for a number of Canadian firms each to produce the wide range of products manufactured in a particular industry. It is said that if, by agreement, these firms could concentrate their production on particular products, longer production runs would result with consequent cost reductions which would benefit both the Canadian consumer and Canadian exports. It is claimed that our combines legislation provides insurmountable barriers to this type of development. It is not clear why this development should not have occurred in a competitive environment unless it be that various industries operating behind the protection of the tariff consider that it is more in their interest to offer a wide range of products to the Canadian public at relatively high prices than to concentrate on the production of a few products with greater efficiency and consequent savings to the public. It appears still to be repugnant, not only to the general public but to learned economists, to repose in private industry the sole authority for managing and rearranging the economy in this fashion. This subject has indeed been discussed in the second annual review of the Economic Council of Canada. In dealing with international trade policies the Council noted that many Canadian producers are oriented towards the relatively small domestic market, and do not obtain the maximum economies of scale. This, the Council said, calls for policies designed to widen markets and to lengthen production runs. In the Council's opinion, this meant reduction in trade barriers and "in anticipation of the possible adjustments in the structure of production. . . . Where consumers are protected by increased foreign competition, specialization agreements or mergers to increase efficiency and eliminate excessive duplication might well be appropriate to achieve successful adjustment. This would warrant a re-examination of anti-combines policy and administration in the context of reduced trade barriers." 95 It may be that constructive action is possible in this field but it should be carefully noted that the Economic Council and all other learned commentators expressly stipulate that this must be coupled with a parallel relaxation of tariff protection which would not only 95. Economic Council of Canada, Second Annual Review: Towards Sustained and Balanced Economic Growth (Ottawa : Queen's Printer, 1965), 172-73.

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protect the Canadian consumer but also, by force of competition, ensure the efficiency of the enlarged Canadian productive units. 96 SCOPE FOR FURTHER DEVELOPMENT OF THE LAW

The present review by the Economic Council of Canada will provide an opportunity to consider whether and to what extent amendments or additions to the substantive law are required. Some areas calling for close study have already been mentioned, including the extension of the prohibition against resale price maintenance to consignment sales, the relative ineffectiveness of the present prohibitions against discriminatory and predatory pricing practices, and the confusion about permissible arrangements to foster export trade. An important report of the Restrictive Trade Practices Commission found a range of practices including tied sales, full-line forcing, and directed buying to be contrary to the public interest. 97 The possible application of the Act to services is already being studied by the director of research and investigation. 98 The growing importance of the service industries in the economy makes a review of their present exemption imperative. The restrictive activities prohibited by the Act relate mainly to commodities rather than services. The only service activities covered by the Act are the transportation, storage, and rental of goods and the price of insurance on persons or property. 99 The consideration of amendments to the substantive law is and will 96. H. Edward English, Industrial Structure in Canada's International Competitive Position; A Study of Factors Affecting Economies of Scale and Specialization in Canadian Manufacturing (Private Planning Association of Canada, 1964); D. H. Fullerton and H. A. Hampson, Canadian Secondary Manufacturing Industry: A Study for the Royal Commission on Canadian Economic Prospects (Ottawa: Queen's Printer, 1957). 97. R.P.T.C. Report, Automotive Oils, Greases, Anti-Freeze, Additives, Tires, Batteries, Accessories and Related Products (Ottawa: Queen's Printer 1962). This report has been specifically drawn to the attention of the Economic Council as a matter to be considered in its enquiry, see, press release, supra note 4. 98. See supra note 71. 99. Combines Investigation Act, supra note 6 s.32(1)(c). The Act does not apply to trade union activities of labour (s.4). It has, however, been held in a number of prosecutions that a restrictive agreement relating to services is an offence if it results in a lessening of competition in regard to commodities. See R. v. Electrical Contractors Association of Ontario and Dent, [1961) O.R. 265, per Laidlaw J.A. at 278; R. v. Alexander Ltd. et al. (1932), 2 D.L.R. 109; R.P.T.C. Report, Street Paving Tenders in the City of Hull (Ottawa: Queen's Printer, 1965), leading to a prosecution where the parties to the combine pleaded guilty in the Quebec Superior Court, January 27, 1967.

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always be important. New times and new circumstances will, in the future, as in the past, make it necessary to expand or, at least, redefine objectionable anti-competitive behaviour as long as a policy of combines control is maintained by Parliament. But alterations to the substantive law are less important, for the immediate future, than a re-examination of the constitutional basis for combines legislation and the development of legal procedures which will make it both more effective and acceptable. The present constitutional foundation for the Combines Investigation Act rests on the power of the Parliament of Canada to enact criminal law. 100 This has contributed to the rigidity and inflexibility of the law and its administration. Criminal offences must be proved beyond a reasonable doubt. Charges must be expressed and proven in the categorical manner specified in the statute. The present provisions for injunctive proceedings against existing or proposed arrangements can only add limited flexibility because they must rest on the capacity of the Crown to meet the rigorous standards of criminal proof. Courts have no latitude to consider all the economic and commercial qualifications which might apply to particular cases and are compelled to adopt an "all or nothing" approach in deciding whether offences have been committed. In addition, the classification of commercial arrangements as criminal has created a bad psychological background for administration, which, as early as 1910, was recognized by Mackenzie King101 and has undoubtedly militated against wholehearted acceptance of the legislation by the business community. What is required is a range of civil controls, similar to those available to the government of the United States in the enforcement of the anti-trust laws and related statutes. The types of civil procedures should include power to obtain injunctions to prohibit actual or proposed objectionable trade practices in whole or in part. In simple cases, these might be styled as "cease and desist" orders. In more complicated cases, more sophisticated injunctions could be contemplated, where, subject to meeting the standards of proof appropriate for civil proceedings, the most objectionable features of anti-competitive arrangements could be prohibited and put under the continuing surveillance of the courts. It seems desirable, also, to incorporate some of the "self-enforcing" provisions of the United States laws, the chief of which is the right of parties to claim treble damages for injury inflicted on them by arrangements which violate 100. See cases cited supra notes 14, 18, and 63. 101. See supra notes 8 and 13.

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those laws. This range of civil remedies ideally should be added to, rather than substituted for, the existing criminal sanctions. The experience of the United States demonstrates the desirability of having the whole structure of anti-combines controls backed up by the power to apply criminal sanctions to the grosser types of anti-competitive behaviour. Such a pattern of civil and criminal controls would contribute much to the effectiveness of the law and its administration. It would enable the present laborious and time consuming process of investigation to be short-circuited in proper circumstances. It would make it possible for the administration, the Restrictive Trade Practices Commission, and the courts to give much more sophisticated consideration to the anti-competitive arrangements being reviewed. It would give proper scope for the assessment of alleged breaches of the combines law against the broad purposes and aims of Canadian economic policy and the opportunity to distinguish between the "bad" and the "good" features of such arrangements. The establishment of such a group of civil controls will require a major constitutional test. It would appear that the validity of such controls would have to be based on Parliament's power under section 91, head 2, of the British North America Act over "The regulation of Trade and Commerce." It is impossible, within the bounds of this paper, to discuss the important constitutional decisions of both the Privy Council and the Supreme Court of Canada which have considered the nature and ambit of this power. It is, perhaps, sufficient to say that there appear to be good grounds for asserting that the "Trade and Commerce" power could now support Canadian combines law.102 The courts have pointedly refrained from ruling on the application of the "Trade and Commerce" power as a basis for the Canadian combines law, although invited to do so in several cases. 103 In the leading decision of the Privy Council, which upheld the validity of 102. For a discussion of the possible application of the "Trade and Commerce" power, see Gosse, supra note 3, at 253-66. 103. The Crown, in two recent cases, argued before the Supreme Court of Canada that the Combines Investigation Act was supported by the "Trade and Commerce" clause. In Goodyear Tire & Rubber Co. of Canada Ltd. et al. v. The Queen, [1956] S.C.R. 303, the court was noncommittal because it found the injunctive provisions under review valid under the criminal power. In Cooper Campbell v. The Queen (1966), 58 D.L.R. (2d) 673, the prohibition against resale price maintenance was held intra vires but presumably under the criminal power by which it had been supported by the Ontario Court of Appeal, R. v. Campbell (1964), 2 O .R. 487.

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the legislation as criminal law, Lord Atkin, while not expressing a final opinion on the applicability of the "Trade and Commerce" clause specifically stated that possibility of support under it was not excluded: Their Lordships merely propose to dissociate themselves from the construction suggested in argument of a passage in the judgment in the Board of Commerce case under which it was contended that the power to regulate trade and commerce could be invoked only in furtherance of a broad power which Parliament possessed independently of it. No such restriction is properly to be inferred from that judgment. The words of the statute must receive their proper construction where they stand as giving an independent authority to Parliament over the particular subject matter. . . . Their Lordships ... desire, however, to guard themselves from being supposed to lay down that the present legislation could not be supported on that ground. 104

Certainly the possibility exists that the legislation can be supported under the "Trade and Commerce" power and perhaps it is more likely to be now than in the past because of changes in Canada's economic and business structure. The growing interdependence of all parts of the Canadian economy and the significance for the whole nation of the structure and operation of Canadian business and industry indicate that combines legislation, properly framed under the "Trade and Commerce" power, is likely to be considered as a matter of national and not local concern. Consideration should also be given to the composition of the tribunals which must finally pass upon the legality of the arrangements called into question. It is no reflection on the Canadian courts to suggest that they are not fully equipped now for this purpose. The occurrence of combines cases in the courts is relatively rare and they have been decided by different judges in different jurisdictions so that there is nowhere in Canada a continuing tradition and experience in the courts in dealing with such cases. The situation is different in the United States where anti-trust cases have always been disposed of in the federal courts and where there has been a concentration of such cases in particular courts. As a result, experience has developed, which has made American judges much less reluctant than their Canadian brethren to consider the complicated issues of economic policy raised in these cases.105 104. Proprietary Articles Trade Association v. The King, [1931] A.C. 310, at 326. 105. As to the judicial difficulty in dealing with complicated business transactions and economic theories, see Williams C.J.Q.B. in R. v. B.C. Sugar Refining Company Limited et al. (1960), 129 C.C.C. 7, at 27.

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The approach of the Canadian judiciary has undoubtedly been affected by the criminal character of the legislation which has made it convenient, if not necessary, to consider cases on the basis of simple, clear, dogmatic principles. On many occasions the courts have stated that it is not their function to consider the validity of competing economic theories, although in so doing they have usually accepted one theory in preference to all others. 106 If the broader, more flexible range of civil controls suggested above is accepted, their successful application will require the courts to take cognizance of economic theories and informed opinion on the structure and operation of Canadian business. A convenient suggestion would be to give greater, if not exclusive, jurisdiction to an existing court, such as the Exchequer Court of Canada, in combines cases. A court already overburdened is not likely to greet such a proposal with enthusiasm. However, the present jurisdiction of the court over matters relating to patents, trade marks, and other monopolistic protection of industrial property provides a not unnatural connection with the broad field of combines policy. The issues raised by combines cases are inevitably so complex and so concerned with both economic theory and business behaviour that it does not seem unreasonable to suggest that there might be some adaptation of the United Kingdom's procedure to Canada. This would envisage the creation of a panel of qualified lay personnel, members of which could sit with judges of the court in the adjudication of combines cases. This would enable greater expertise to be brought to bear on the complicated issues presented; it would be an aid to flexibility and selectivity in the adjudication of the cases; at the same time in such a judicial atmosphere, there would remain an adherence to basic legal principles which would ensure consistency in enforcement and certainty in guidance to businessmen and the public. This essay began by describing combines as "a continuing dilemma." If it is admitted, as appears necessary, that the regulation of important areas of the economy cannot be left to the sole discretion of the businesses operating in it, then the case remains clear for the continuance 106. R. v. Container Materials Limited, (1940) 4 D.L.R. 293, per Hope J.A. at 298 quoting, with approval, Sir Frederick Pollock's aphorism "Our Lady of the

Common Law is not a professed economist"; R. v. Howard Smith Paper Mills et al., (1954] 0.R. 543, per Spence J. at 571. For an attack on the judicial assumption that the courts are "neutral" in economic theory on the ground that it results in preferment of one economic theory over others, vide Friedmann: "Monopoly, Reasonableness and the Public Interest" (1955), 33 Can. Bar Rev. 133, at 136.

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of some attempt to regulate the business practices now embraced in Canadian combines legislation. The dilemma is simply to achieve some proper balance between the necessities of establishing some basic legal principles in this field of law and of allowing sufficient administrative and judicial flexibility in administration to permit the best development of Canadian business in the interest of Canada as a whole. In a society which, albeit imperfectly, still adheres to the principles of free economic enterprise, the dilemma is acute. It is all too easy to suggest that the best resolution of the problem is to find a way of permitting each industry to be separately appraised and regulated in the light of the national interest as it may appear at the time. The adoption of such a course must inevitably result in an increasing degree of government control over each industry so appraised and regulated because regulation implies continuous surveillance. If the dilemma is to be resolved at all, it would appear necessary still to adhere to the policy of prohibiting certain broad lines of economic activity which are deemed to be detrimental to the national interest but to create an administrative and a judicial structure which will permit greater flexibility and selectivity in the enforcement of the law.

0. E. LANG

Rational Solutions for Labour Problems

WE ARE GROWING ever more conscious of serious and unsolved problems in the field of labour relations. We see the difficulties which strikes can create for large businesses and for small ones. We see the serious disruptions which strikes can impose upon society generally, and the impossible situation which arises when the traditional labour weapon is employed or its use is threatened in an area of essential service. We seem to be just beginning to understand the implications, in terms of the burden imposed upon the consumer, of the new strength of labour unions using their weapon, the strike. It is the purpose of this paper to review the implications of our present methods of dealing with these problems and to suggest some better solutions. The labour movement today continues to regard the strike as the main bulwark of its claims for right and justice. This is more than an emotional attachment to a particular weapon, grounded as it is in a sense of history. As inheritors of the British traditions in society we have inherited the effects of the history of labour relations in England.1 In that history the industrial revolution with its demand for labour in the modern sense and in the modern circumstances occurred at a time when the economic philosophy of the day favoured laissez faire . This doctrine supported a form of contest in the business world which civilized society had long since eliminated from other areas. It favoured competition and the exertion of available force without restraints of law and reason except such as the individual exercisor of power imposed upon himself. The laws relating to integrity of person and property which put a limitation upon the use of force

1. For a review of that history, see Cooper and Wood, Outlines of Industrial Law (Toronto: Butterworth, 1962), XI, at 385 et seq. and Carrothers, Collective Bargaining in Canada (Toronto: Butterworth, 1965), 11-42.

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generally were not applied to prevent the use of economic force. The entrepreneur was given free reign to use whatever property, patents, and monopolies he had obtained or had been given by society and to charge prices which would maximize his profits and at the same time to pay wages which would minimize his costs. When changes in agricultural practices produced a surplus of labour the entrepreneur was allowed to lower wages in the face of this increased supply to the point or below the point of subsistence. Against this tremendous economic strength put in the hands of a small class by our law and by the economic attitude of those who controlled the law, the average working man had no chance at all to assert his demands for justice without combining with his fellows to counter strength with strength. Many of the steps which the union of men wished to take to assert its right to a larger portion of the income from production were in fact seen as threats to the integrity of person and property and were therefore forbidden by the law. As a result, the law at first forbade this joining together by men but gradually their obvious need for some assistance led to a modification of view. At this critical point in our history the legal system and society opted against introducing a rational examination into the claims for a just wage which the working men were asserting and agreed instead to give them some palliative by allowing them to put their strength together in order to press their demands. 2 This has been the shape of the debate about just wages ever since. There can be little doubt that at the first stages when the strength of unions was put to use on behalf of the working man, the short run economic circumstances had created unduly low wages for the men. As long as this was so the use of strength and the successful use of the strike would produce a result which improved justice. When this was visibly true, and it was easily visible to the working men themselves, their strength and the strike would naturally come to be looked upon with joy and gladness. It should be perfectly clear, however, as a logical proposition that if weapons of power are used to obtain a better wage when the previous wage was already high enough, that is, just, then the weapons, while they still may be regarded with favour by those who obtain more for themselves, are in fact contributors to injustice. Without attempting a particular assessment of wages in different segments of our economy 2. For one brief period the route towards rational solution was pursued : The Combination Act, 1800, 39 & 40 Geo. III, c.106, s.18, gave an appeal to a justice of the peace when wage disputes were not quickly settled. This procedure was little used and was repealed in 1824. See Cooper and Wood, supra note 1, at 386.

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today it is nonetheless possible to note that if any unduly high wage is induced in any area there goes with it an unduly high price for the products being produced at the expense of the ordinary consumer, and an unduly low use of labour in the area concerned at the expense of other men who would wish to work or to work for higher wages. It should also be noted that the strength of the union movement could give added protection to a high-wage area by protecting the whole industry and its excessively high prices through its ability to prevent a competitor from entering the field without also paying the same high wages. This means that the monopoly and semi-monopoly positions of entrepreneurs which, formerly, frequently depended upon specific possession of resources or patents, can now be created or strengthened by the assistance of the union of men within its enterprise. To summarize, when faced with a real or potential use of economic force by an entrepreneur in depressing wages unduly, we met the problem, in part, by allowing the men concerned to unite and we sanctioned their union and their use of economic force, including the strike, to obtain better wages. We then introduced no measures to assure that the use of this power which was designed to lead towards better and therefore just wages might be restricted if it continued to be used when it was leading towards unduly high wages. Nor did we make any real attempt to constrain the use of economic power by the entrepreneur in his management of prices. When he had a monopoly or patent or other device for restricting production, devices which were in fact conferred upon him or protected for him by society itself, he could restrict production and charge an unduly high price on the basis of that restricted production with no consideration except the maximization of his own profit. To this day we have taken but few effective steps to deal with the problem of unduly high prices. Here and there we have put a finger upon the mechanism of our economic workings to slow down the growth of this or that monopoly position. In general, however, we do nothing to restrict the power of the entrepreneur, now perhaps joined and having his power augmented by the union,3 to limit production and to increase prices for the benefit of himself and themselves, and to the detriment of the rest of society which must pay the high prices and bear the economic consequences of dislocated resources. 3 . A. W. R. Carrothers, Dean of Law, University of Western Ontario, has written an interesting parable "What Happened Next" (1959), 1 B.C. Law R. 105 where the Barons and Dragons vie in more or less friendly fashion. The author omits mention of the consumers who provide the sacrifices.

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There is one area where we become price and production conscious and have some control by society over prices. It is in this area, the area of public services under government control, that we have also seen the first reaction against the application of union power through the strike to obtain higher wages. In public utilities this economic problem comes into clearest focus because the prices are frequently a function of cost without any exorbitant profits being sought, and wages are an important part of the cost component. It becomes very clear here that if we do not pay the man who lends his service an adequate wage we are taking his work from him without paying him what is his due. At the same time it is as clear that if he claims an exorbitant wage he is attempting to take something from us to which he is not entitled and he should be regarded as no better than a thief. It is not surprising to see the strike put aside in various jurisdictions4 in this area and the turning instead to some solution for settlement which examines the rightness of the situation and not the power of the parties. It is my contention that we should learn a lesson from this example and that we should be prepared in other areas than those of public service to turn to rational solutions rather than solutions of force for our labour problems. We should no longer believe that the use of force will produce the correct result magically. We should no longer be willing to pay the cost of dislocation and loss resulting from strikes and lockouts. A trial of strength, whether the modern strike or the ancient trial by battle, proves only who is stronger, not who is right. However difficult it may be to use them, analysis and judgment are the only means designed to obtain just solutions. There is general acceptance today of arbitration in labour disputes, provided that it is neither binding nor conclusive. Yet unless it is binding it does not cause a substitution of reason for strength as the final basis for settling a dispute. Conciliation and arbitration which leave the parties with their ultimate weapons of strike and lockout are simply elaborations of the bargaining process. An arbitral decision may affect the strength of one or other of the parties by weakening the popular support he has among his friends and acquaintances. It will do this only to a degree related to the specific circumstances of the dispute but it will not deprive him entirely of his resort to strength and the test of strength will remain the final measure of the positions which the parties will assume. So long as the final test 4. Saskatchewan legislation offers the most recent example: Essential Services Emergency Act, 5.5. 1966 (2nd Sess.), c.2.

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between parties is a resort to strength, the positions which they will take and can maintain in bargaining will reflect their assessment of this final position. It will be a question more of who is strong than of who is right. If this approach to problem-solving allows might to override right, one should expect that the weaker of the parties would always object and would ask for a change in procedure. This would happen if the parties were working within a framework of predetermined just prices. When, instead, the parties together have the strength to take from the consumer a price higher than justice would allow, they may be content with a division of spoils which gives each more than he ought to have even though one gains much more than the other. It is not surprising that the poorer of this pair of thieves does not call in the law of reason when he would share the punishment from its application. As long, therefore, as entrepreneurs can charge unjust prices for their products they will not be completely unhappy with the existing methods for settling labour disputes. As long as the entrepreneur can charge excessive prices for his products the working man will not give up a procedure which allows him to obtain a higher than just wage out of the extra money which the entrepreneur is obtaining from his customers.5 The working man will be rightly suspicious of any proposal to achieve a just wage for him, when that is a lower wage, if no simultaneous attack on product price takes place. If prices are not brought into line on a rational basis, wage adjustment will simply transfer the total ill-gotten gain to the entrepreneur. This may explain the typical and strenuous objections from labour when compulsory solutions are proposed for disputes over wages. This opposition to rational solutions should not carry over to cases of government-owned corporations performing public services where the profits belong to the public. When opposition does carry over to these areas it may be partly a result of the extent to which an ingrained opposition to compulsory solutions has developed. One other basis for labour opposition to compulsory arbitration or other imposed solutions in labour disputes is frequently voiced by union men. In essence, it is the theory that labour cannot trust, cannot 5. Professor Hansen has suggested that when labour is receiving a just wage its demands will stay in line with productivity because of labour's common interest with the consumer group. Neither theory nor observation support this sanguine view. Alvin H . Hansen, Economic Policy and Full Employment (New York: McGraw-Hill, 1947), 246.

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depend upon the integrity of the judge or arbitrator who is empowered to arrive at the just solution. As long as this distrust exists, tremendous care should be taken in the appointment of a tribunal to determine these disputes in order to put to rest so far as possible any suspicion that the tribunal will enter the matter with a bias. Let us emphasize, however, that it would be folly to attempt to impose solutions at the wage end of our economic problem without at the same time turning attention to the price problem. In public services one assumes that this is going on continually, but at present we have no machinery for examining the position of prices in the economy generally. There is one additional fundamental reason why compulsory arbitration has a bad name in much of the English-speaking world. Instead of being a separate and completely different approach to the solution of labour problems, arbitration generally has been an attempt to work out a compromise between the parties at their last position. This means that, just as the parties have had their crude power in mind in arriving at their last position in bargaining, so the arbitrator commonly bears their power in mind in cutting a compromise between their last offers. This is really a way of arriving at a power solution without bloodletting. It does nothing to increase the likelihood of wages being reasonable. It does nothing to decrease the likelihood or the possibility that unjust wages may be paid. What we need from the arbitrator or from a real decision-making body is recognition that the solution of a particular wage problem should not be based on the power of the respective parties as reflected in their last demand in bargaining, but that it should instead be a rational solution based on an economic-social analysis of the question of the just wage for the particular work in issue at the particular time and place. Since it would be completely prejudicial to the cause of reason if a rational solution were imposed at the wage side of production without any restrictions being imposed upon price, we must introduce a technique for the general review of abuses in pricing as we impose the decision of a tribunal in matters of wages. We need an additional tribunal capable of understanding the economic and social considerations which should affect a determination of a just price.6 This is not a simple task, and just as we will leave bargaining to the parties in a 6. One tribunal could handle wage and price problems since it would need the same type of economic expertise and supporting staff, but there might be specialization advantages in having two.

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wage dispute and use the tribunal only as a last resort, so we shall want to lay down guidelines and sanctions to induce entrepreneurs to set just prices. We must face the difficult task of developing a theory of fair return on investment, of appropriate reward for invention and talent, of fair compensation for taking risks, and then decree that all product prices must be reasonable in accordance with these principles. Because of the difficulty in being precise we should then declare a permissible margin within which no punishment for overcharging would apply. If we then impose significant penalties for pricing beyond the margin, we will have encouraged the businessman to stay close to reasonable prices. We might encourage him to do so by allowing the consumer or, in cases of small items, a public authority on behalf of consumers to recover fourfold damages if an excessive price has been charged. The special tribunal will decide such complaints as do arise. However difficult it will be to develop satisfactory guidelines, it must be better to turn our minds to the issue of fair returns than to leave the matter to chance. The economic problems involved in determining fair wages are less than those associated with prices, but in this area also it is envisaged that the parties to disputes would rarely have recourse to a tribunal. The decision of the tribunal would become the final method for settling disputes in place of strikes and lockouts which would be illegal. The parties would negotiate, they could use conciliation, they could agree on their own formula for finding a final solution. They would resort to the tribunal for a decision only when an impasse existed. Indeed the costs of resorting to the tribunal should be awardable at the discretion of the tribunal against any party which it finds to have been unreasonable in the later stages of negotiation. This would mean that negotiation would still take place and most disputes would be settled by bargaining but that the background against which the bargaining takes place would be the tribunal's attitude about rational solutions for prices and wages and not the power of the parties to hurt one another at the particular time. Because negotiation would remain important, much of our labour law would remain the same. The strike and lockout and other forms of battle by force would be abolished but the present rules relating to union integrity and collective bargaining would remain in force. In time one might hope that confidence in the new tribunal would grow and that unions would resort to it for settlement of intra-union disputes as well.

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These proposals no doubt set challenges for economists in preparing guidelines and difficult tasks for the tribunal in applying them. The tribunal would be specialized and would properly be staffed with men with appropriate training. Still, the early years would be difficult as, step by step, a body of rules develops in the fashion of the early common law to give us law based on experience. We will then have removed the last great remnant of trial by battle and substituted analysis and judgment.